The Department of Labor’s newly finalized rule expanding the definition of who counts as a fiduciary under the Employee Retirement Income Security Act is estimated to cost $31.5 billion over the next decade, along with requiring nearly 57,000 hours in compliance efforts. The final rule’s cost estimate was significantly higher than the $5.7 billion identified when the rule was proposed last year, according to a study by the American Action Forum.
The higher cost estimate came as DoL incorporated industry estimates of compliance costs. The agency had downplayed industry estimates in its proposed rule. The costs appear likely to affect a “substantial number of small entities,” according to DoL’s regulatory impact analysis.
“This rule is clearly one of the most burdensome rules in recent years, and likely one of the most expensive DOL regulation[s]ever,” AAF researchers said. “Despite some apparent exemptions and carve-outs, DoL still sees these costs increasing dramatically over the proposed version due to a fuller understanding of the data available. These costs will have significant implications for financial firms and consumer[s]in the future.”