Democrats Demand Trump Administration Rescind Proposals Leaving Workers’ Retirement Savings at Risk
“These proposals would move the nation backwards by reinstating a broken status quo that allows financial advisors to evade their fiduciary duties and denying retirement savers meaningful remedies when they have been harmed.”
WASHINGTON – Yesterday, in a letter to Labor Secretary Eugene Scalia, House Education and Labor Committee Chairman Robert C. “Bobby” Scott, Senate Health, Education, Labor, and Pensions Committee Ranking Member Patty Murray (D-WA), House Financial Services Committee Chairwoman Maxine Waters, Senate Banking Committee Ranking Member Sherrod Brown (D-OH), and Senate Finance Committee Ranking Member Ron Wyden (D-OR) led 24 Democrats in opposing the Department’s retirement investment advice rules. These rules help financial advisors evade their responsibility to clients—leaving hardworking retirement savers at risk and without any meaningful remedies when they have been harmed.
Millions of Americans seek financial advice on investing their hard-earned retirement savings, but the advice they receive is not always in their best interests. Retirement advisors sometimes provide “conflicted advice,” in which an advisor steers a client toward investments that are lucrative for the advisor, even if it’s not right for the client. In fact, analysis shows conflicted advice costs workers an estimated $17 billion in retirement plan losses every year.
In the letter, the Members note that the Obama administration addressed the issue of conflicted advice by establishing a rule that closed decades-old loopholes to protect retirees. Instead of defending the Obama-era rule protections in court or improving upon them, the Trump administration reinstated an outdated and loophole-ridden standard that allows unethical advisors to cheat their retirement clients without providing the American public an opportunity to comment. Additionally, the Trump administration proposed a rule that gives workers no legal recourse when they’ve been cheated by financial advisors while investing their retirement savings.
“At a minimum, workers investing their hard-earned savings for their retirement should have confidence that financial advisors are acting in their best interest and not providing them with conflicted advice,” the Members wrote. “The Department’s continued insistence on enforcing these restrictions will further harm vulnerable students and make it harder for institutions to provide effective support.”
The Members also called out the Department for rushing through the rulemaking process despite requests from stakeholders for a more deliberative process. Senator Murray and Congressman Scott previously called for the Department to extend the unusually short 30 day comment period—which it refused to do. While ERISA states the Secretary may not grant prohibited transaction exemptions like those advanced by these proposals “unless he affords an opportunity for a hearing”—the Department refused to hold such a hearing.
To read the full text of the letter, click here.
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