WASHINGTON, D.C. | February 2, 2016 -
Retirement security has always been a priority that stretches across party lines. We all want every American to retire with the dignity and financial security they deserve. It’s why Congress passed the Employee Retirement Income Security Act
with near unanimous support. It’s why John Boehner and Ted Kennedy worked together on the Pension Protection Act
, and why George Miller and I worked together on the Multiemployer Pension Reform Act
. It’s also why we are here today.
We are here to improve protections for those who rely on the help of financial advisors when saving for retirement. This effort began four and a half years ago, when Congressman Phil Roe held the first congressional hearing on the Department of Labor’s proposed changes to the rules governing retirement advice. At the time, Chairman Roe raised concerns that the department’s expansive proposal would hurt the very people it was intended to help, and those concerns were shared by Republicans and Democrats alike.
Due to the leadership of Congressman Roe and others, the department would later withdraw its proposal. We had hoped that would mark the beginning of a more collaborative effort between Congress and the administration, one that would improve in a responsible way policies affecting retirement advisors. In fact, we have repeatedly expressed our willingness to do just that.
Unfortunately, the department has insisted on a different approach. After withdrawing its proposal in 2011, the department went back behind closed doors to draft a new regulation that suffers from the same fatal flaws as the first. It creates a convoluted regulatory scheme that will drive up the cost of retirement advice. Men and women will lose access to their trusted financial advisors. Providing basic information about retirement planning will be severely restricted, and it will be much harder for small business owners to provide retirement plans to their workers.
This regulatory proposal will hit low- and middle-income families the hardest. Wealthier Americans can already afford to hire professional advisors who direct and manage their investments on a near daily basis. Low- and middle-income families cannot. These families have fewer means to invest, and they often just need some help getting started and staying on the right track. The Department of Labor is threatening the ability of these families to find the help they need at a cost they can afford.
These concerns have been expressed time and again by lawmakers in both parties serving on both sides of the Capitol. The question is: What are we going to do about it? Are we going to cross our fingers and hope the administration gets this right? Or are we going to put forward our own ideas to improve the law and protect families saving for retirement? The stakes are too high for Congress to sit back and do nothing.
Fortunately, Republicans and Democrats are committed to a responsible, bipartisan alternative. That is why Congressman Roe, along with Representatives Buddy Carter, Richard Neal, John Larson, and Peter Roskam developed the legislation we are now considering. Despite important differences, the bills before us today and the department’s regulatory proposal are similar in two important ways.
First, they would both require financial advisors to serve their clients’ best interests. There has never been any argument over whether a ‘best interest’ standard is the right standard, but there are clear differences on how to implement it. This bipartisan legislation strikes the right balance between raising the bar on financial advisors and ensuring individuals have access to basic advice, like whether to roll money from one retirement account to another.
Second, both the legislation and the department’s proposal recognize that transparency is vital to empowering individual investors. The legislation builds upon existing policies requiring advisors to disclose meaningful information to their clients, including how the advisor is compensated for his or her services. Unlike the proposed regulation, the bipartisan legislation provides investors with the information they need to make an informed decision and then lets them make the decision that’s best for their families.
Raising the bar on financial advisors and increasing transparency are how you strengthen protections for retirement savers. This bipartisan legislation accomplishes both in a way that doesn’t harm the men and women who rely on the help of their trusted financial advisors.
In closing, I’d like to briefly discuss the process, because I suspect some of our colleagues will as well. More than two months ago, Congressman Roe and others invited anyone wishing to craft a bipartisan alternative to the department’s proposal to join the effort. Not a single Democrat on this committee accepted the invitation. Yet here we are, considering a bipartisan proposal, in an open legislative process, where Republicans and Democrats are free to offer their ideas.
This is a stark contrast to the department’s own regulatory process. No one here has seen the latest draft of the department’s proposal. No one knows what – if any – changes the department has made in response to public concerns. And no one will have an opportunity to review or comment on the final proposal before it is imposed on millions of families.
The hardworking men and women trying to save for their retirement deserve better than an extreme, partisan scheme jammed through a flawed regulatory process. This legislation provides members of Congress an opportunity to vote on a responsible, bipartisan alternative that will strengthen the retirement security of working Americans, and I urge my colleagues to support it.