Court overturns retirement planner rule

NEW ORLEANS — A federal appeals court ruled Thursday that the Department of Labor under President Barack Obama overstepped its authority when it wrote a rule that required financial professionals, including brokers and insurance agents, to put their customers’ financial interests ahead of their own. The 5th U.S. Circuit Court of Appeals overturned a lower court’s ruling in a 2-to-1 decision siding with the plaintiffs, which include several groups representing the financial services industry. “That times have changed, the financial market has become more complex, and IRA accounts have assumed enormous importance are arguments for Congress to make adjustments in the law, or for other appropriate federal or state regulators to act within their authority,” the majority wrote in their opinion. “A perceived ‘need’ does not empower [the Labor Department] to craft de facto statutory amendments or to act beyond its expressly defined authority.” The Obama-era regulation, drafted over roughly six years, had thus far survived intense criticism and resistance from the industry, which argued that the rule would make it too costly to work with smaller investors. The rule, which took partial effect in June 2017, requires financial advisers to act as fiduciaries when providing advice related to a client’s retirement accounts, including individual retirement accounts and 401(k)s.