A bipartisan group of House lawmakers rolled out legislation Friday designed as an alternative to the Department of Labor’s proposed fiduciary rule. The legislation is an attempt to raise standards on financial advisers without limiting access from low-and middle income families.
If the DOL rule is enacted, it would redefine what the Employee Retirement Income Security Act considers a fiduciary, expanding the scope of regulations placed on financial advisers.
The Strengthening Access to Valuable Education and Retirement Support (SAVERS) Act, spearheaded by Ways and Means Subcommittee Chairman Peter Roskam of Illinois and Massachusetts Democrat Richard Neal, would still broaden the definition definition of a fiduciary to protect investors from conflicts of interest, but would not change the way advisers are compensated.
The DOL’s regulatory proposal supports using automated robo-advisers for retirement planning over in-person financial advice provided by an adviser working on commission. The rule, which was aimed at preventing conflicts of interest, calls for financial planners to work on a fee-based system instead, which critics say prevents consumers from shopping around for the best investments by forcing them to pay for services they wouldn’t be subjected to under current law.
The legislation would allow for businesses and individuals to purchase a financial product without the extra financial burden of paying for their investment planner’s time.
“These provisions recognize that when individuals choose to shop for investment products and services, they are smart enough to compare information on pricing and the potential compensation that may be earned by the seller,” the bill summary says.
The bill aims to create a level of transparency for those seeking retirement advice. Financial advisers would be required to provide details about the cost of investment products they are selling and the potential compensation they may receive.
“We’re proud to strengthen and protect retirement planning tools for working families by raising investment advice standards throughout the industry,” said Roskam, Neal, Tennessee Republican Phil Roe and Connecticut Democrat John Larson said in a joint statement. “These bipartisan proposals require advisors to serve their clients’ best interests, strengthen protections for retirement savers, and maintain access to quality financial advice for small businesses and low- and middle-income Americans.”
The proposed rule has received pushback from both parties. 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.
Despite concerns, the White House has reiterated it will veto any measure diluting the agency’s proposal.
“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,” Roskam told The Daily Caller News Foundation.
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