A bipartisan group of House lawmakers is urging fellow members of Congress to push back against a Department of Labor regulatory proposal that potentially limits access to retirement advice for low- and middle-income Americans.
The “Dear Colleague” letter written by Subcommittee on Ways and Means Chairman [crscore]Peter Roskam[/crscore] of Illinois, Massachusetts Democrat [crscore]Richard Neal[/crscore], Tennessee Republican [crscore]Phil Roe[/crscore] and Connecticut Democrat [crscore]John Larson[/crscore], warns the fiduciary rule, which would expand the scope of regulations placed on financial advisers, would have “immediate and severe consequences” on those trying to save for retirement.
The proposed DOL rule, strongly supported by the Obama administration, opposes in-person financial advice provided by commission-based financial brokers, instead offering the options of using either an automated robo-advisor for investments, or using fee-based services – a move critics fear will lead to unnecessary costs for those shopping around for investment options best tailored to their needs.
“Bipartisan concerns have been raised that the proposal could cause individuals to lose access to trusted financial advisors, raise the cost of receiving financial advice, and lead to fewer small businesses offering retirement plans,” the letter reads.
The lawmakers rolled out the SAVERS Act and ARAP Act, which would act as alternatives to the agency’s rule – still raising the bar on the investment industry to protect investors’ best interests without placing any undue financial strain on those who need retirement advice the most.
The legislation would require advisors to disclose potential conflicts of interest, placing penalties on financial planners who violate their clients’ trust.
New Mexico Democrat Lujan Grisham, Illinois Republican [crscore]Tom Reed[/crscore], Georgia Democrat [crscore]David Scott[/crscore] and Georgia Republican [crscore]Buddy Carter[/crscore] have recently signed on as co-sponsors to the SAVERS Act.
The White House has reiterated it will veto any legislation that weakens the language of the DOL’s proposal, but the president may face backlash from members of his own party due to the rule’s potential implications.
More than half of House Democrats signed a letter addressed to Secretary of Labor Thomas Perez coming out against the regulation in its current state.
The amount of support seen from both sides of the aisle could be enough to override a presidential veto.
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