Make Advisors Accountable, CalPERS Urges DoL

America’s largest pension has weighed in on the proposal to extend fiduciary duty to retirement advisors.

The California Public Employees’ Retirement System (CalPERS) sent an open letter to the Department of Labor urging it to adopt a controversial fiduciary standard for retirement investment advisors. 

The proposal—advocated by the Obama administration—would not directly apply to CalPERS, which is already a fiduciary for its 1.7 million members. Extending that level of responsibility to advisors reflects the $300 billion fund’s core philosophy, it told Department of Labor officials.

“CalPERS believes that fiduciaries should be accountable for their actions, and must transparently perform their duties to the highest ethical standards,” Ann Boynton, CalPERS’ deputy executive director of benefits policy, wrote to the federal labor department.

“The proposed rule appears to align with CalPERS’ beliefs on fiduciary responsibility and we support the department’s efforts to ‘safeguard plan participants by imposing trust law standards of care and undivided loyalty on plan fiduciaries,’” Boynton continued, quoting language from the proposed legislation. 

The pension official highlighted the more than 40 million American families with assets in individual retirement accounts—their aggregate balance totaling upwards of $7 trillion. This population, she said, continue to be vulnerable to self-serving investment advice as long as the industry does not have to disclose any conflicts of interest. 

Failure to implement the rule, according to CalPERS, could cost individual investors up to $1 trillion in retirement savings over the next 20 years. 

“The proposed rule appears to be congruent with CalPERS’ belief that all Americans should have effective means to pursue retirement security,” Boynton concluded.