A bipartisan group of House lawmakers is set to unveil legislation designed to completely eclipse a proposed Department of Labor (DOL) rule they feel alienates small businesses and low- and middle-income families from obtaining retirement advice.
The controversial regulation will redefine what the Employee Retirement Income Security Act considers a fiduciary, expanding the scope of regulations placed on financial advisers.
The bill — spearheaded by Illinois Republican [crscore]Peter Roskam[/crscore], Massachusetts Democrat [crscore]Richard Neal[/crscore], Tennessee Republican [crscore]Phil Roe[/crscore] and Connecticut Democrat [crscore]John Larson[/crscore] — is poised to be introduced before the end of the year and will raise the bar financial planners are held to just short of the fiduciary standard.
The DOL’s regulatory proposal opposes in-person, commission-based retirement advice provided by financial advisers, instead providing the options of using either automated robo-advisers for investment advice, the option favored by the Obama administration, or using fee-based services.
While insurance salesman, broker dealers and dually registered financial advisers are currently held the to fiduciary standard, the rule will broaden who falls under the umbrella of regulations.
“I’m working along with Congressman Richie Neal to craft some language that will create a standard to root out bad apples in the industry, but won’t create such an adverse impact on people at the lower end of the economic chain,” Roskam, the chairman of House Ways and Means Subcommittee on Oversight, told The Daily Caller News Foundation.
The Illinois Republican says he believes the Obama administration’s long-term goal is to get the private sector out of the retirement space, and in the short term it’s creating an impossible standard that will lead to limited access to financial services.
While the White House says it will veto any measure overturning the rule, over half of House Democrats signed a letter addressed to Secretary of Labor Thomas Perez coming out against the regulation in its current state.
“One-hundred members of the president’s own party have expressed strong concern about the fiduciary rule,” Roskam said. “I think there’s likely to be an overwhelming majority in the House that supports this, and in light of that I think the administration is going to have to reconsider whether they want to get crosswise with half of their party.”
According to the Investment Company Institute, the national association of U.S. investment companies, if the rule is implemented, increased fees and lower returns will result in a net loss of $100 billion over the course of a decade.
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