In the wake of approval of a House bill opposing the fiduciary proposal of the Department of Labor (DOL), four Republican and Democratic lawmakers outlined a series of seven legislative principles they believe must govern retirement advice and retirement advisers.
The congressional effort is the latest shot against the DOL’s measure, and the stated bipartisan concern is that the rule will make it difficult for low- and middle-income families to access financial advice so they can adequately plan for retirement. “We are concerned that the Department of Labor’s current fiduciary proposal may have unintended negative consequences that could harm individuals and families saving for retirement,” the House members—Peter Roskam (R-Illinois), Richard Neal (D-Massachusetts), Phil Roe (R-Tennessee), and Michelle Lujan Grisham (D-New Mexico)—said in a release.
At the same time, the legislators said in their statement that individuals seeking investment advice must have strong protections. The four are working together to introduce a bipartisan legislative solution that reflects several investor-friendly principles, such as the requirement that retirement advisers work in the best interests of the investor, and the need for clear, plain-English disclosure of conflicts of interest in compensation or fees.
Another principle states that investor choice and consumer access to all investment services, such as proprietary products, commission-based sales and guaranteed lifetime income, should be preserved in a way that does not pick winners and losers.
The legislators cited the need for the retirement savings industry to make immediate changes upon the rule’s release. In the event the final rule has flaws, they said, there is a strong likelihood those changes could limit access to services and education for those saving for retirement.
The Financial Services Institute (FSI), which has previously registered its general dislike of the fiduciary rule, issued a response to the bipartisan effort. “We have said all along the DOL needs to get this rule done right, not done fast,” said David Bellaire, FSI’s executive vice president and general counsel.
Without specifying any details of the bipartisan legislative solution to come, the legislators said it would ensure that all Americans have access to financial advice for retirement planning, protect individuals from conflicted advice and require advisers to act in the best interests of retirement investors.