Get the Facts on the Fiduciary Rule
This week, Committee Republicans held a markup of H.R. 4293, the Affordable Retirement Advice Protection Act, and H.R. 4294, the Strengthening Access to Valuable Education and Retirement Support (SAVERS) Act of 2015. The names of these bills are misleading at best, as neither would be affordable for retirees or support them.
What these bills do
Both bills, H.R. 4293 and H.R. 4294, permit unscrupulous financial advisors to continue to act in their own financial interests, rather than put the best interests of their clients first. These bills would be bad for workers and retirees.
Rather than establishing an enforceable best interest fiduciary standard that would strengthen protections for retirement savers, H.R. 4293 does the opposite. It allows firms and advisers to disclose and disclaim away their fiduciary obligation. But, disclosure and disclaimers alone are not sufficient or effective. In fact, disclosure alone may be harmful to workers and retirees who are seeking to invest their savings.
Why these bills are bad for retirees
Research shows that people who are given disclaimers and disclosures are even more likely to believe their advisors are acting in the best interest of their clients. In addition, both bills establish constitutionally-suspect process that essentially gives the one body of Congress veto power over the Department of Labor’s (DOL) rule.
H.R.4293 is opposed by a wide and diverse coalition of stakeholders, including AARP, AFL-CIO, Alliance for Retired Americans, AFSCME, Americans for Financial Reform, Association of University Centers on Disabilities, Better Markets, Center for Economic Justice, Center for Global Policy Solutions, Center for Responsible Lending, Consumer Federation of America, Demos, the Financial Planning Coalition, the International Machinists, the Sheet Metal Workers, the International Brotherhood of Electrical Workers, the Leadership Conference on Civil and Human Rights, NAACP, the National Council of La Raza, Public Citizen, SEIU, US PIRG, and others.
What is the status of the rule
In February of 2015, the Department of Labor (DOL) issued a proposal seeking to modernize the Department’s “fiduciary duty” rule. The proposed rule would require retirement advisors to put the best interests of their clients above their own financial interests.
After conducting a thorough and transparent process, the DOL’s work on the rule is nearly done. The DOL has explained repeatedly that the final rule will be modified in important ways that take the comments received during the rulemaking process into account. The prudent approach would be to fully evaluate the final rule when it comes out and then determine if legislative action is warranted. At the markup, Committee Democrats urged their Republican colleagues to reserve judgement until DOL finalizes the rule.