Delaying new rules over retirement planning will help U.S. bank profits, according to one expert.
Congressman Joe Wilson, a Republican from South Carolina, introduced a bill last Friday designed to delay the introduction of the Department of Labor (DOL) fiduciary rule for two years.
The new DOL regulation, which requires financial advisers to act in the best interests of their clients when addressing retirement accounts, was due to begin on April 10.
Jeffrey Saut, Chief Investment Strategist at Raymond James told CNBC Friday that the fiduciary rule is damaging to banks.
"The new rule will force asset managers to cancel active management accounts and switch to passive management.
"This means investment banks will receive lower fees," he said by telephone.
Saut believes rather than protecting the retail investor, the new rules would force them in to poor investments.
"The investing public is selling active and buying passive at a time when they should be doing the opposite," he said.
Saut said the bill to delay the legislation by two years would effectively "kill it" and ultimately protect bank fees.
Joining the call to delay the bill is the U.S. Chamber of Commerce. The business lobby group said Wednesday that the bill was too expensive, unwieldy for advisors and has an unrealistic timeline.
What is the Fiduciary Rule?
The Department of Labor Fiduciary Rule is a new ruling, scheduled to be phased in April 10, 2017.
It is more than 1,000 pages of legislation which forces all financial professionals to the level of a fiduciary, which binds them to higher standards of ethics and legality.
The original legislation, introduced in 1974, regulated the quality of financial advice surrounding retirement plans.
Under the new rules, the DOL stipulates that advisors must reveal conflicts of interest and also enforces higher clarity over fees.
Financial professionals would be legally obligated to put their client's best interests first rather than simply finding "suitable" investments.
It is expected that those who work on commission, such as brokers and insurance agents, would be impacted most.