In a recent editorial, the Washington Post recognizes
the harmful effects of the administration’s “fiduciary” proposal. Writing on a rule crafted behind closed doors
, the Washington Post
The fiduciary rule would inevitably abolish some number of business relationships certain people might accept; instead of possibly conflicted, but still “suitable,” advice, they would get none, or perhaps “robo-advice” online.
In layman’s terms: The rule will restrict access to affordable retirement advice. This is precisely what Republicans and Democrats have expressed for years. In fact, Rep. Phil Roe (R-TN) shared these exact concerns at a hearing last year, telling Labor Secretary Thomas Perez:
Make no mistake, if this rule goes into effect, a lot of people will quickly learn that their financial advisor—someone they may have known and trusted for years—will no longer be able to take their call. And it is important to note that low- and middle-income families are the ones who will bear the brunt of this misguided proposal. They will lose access to the personal service they rely on and be forced to find suitable advice online or simply fend for themselves. As is often the case with big government schemes, the wealthiest Americans will do just fine and those we want to help will be hurt the most.
The Washington Post’s editorial goes on to say that a “common sense” approach to retirement advice must be taken. But does the proposed rule reflect a common sense approach?
Not exactly. Here are just a few ways the administration’s proposal will make it harder for low- and middle-income families to plan for retirement:
Even merely providing examples of types of investment options would trigger a whole host of new rules and reporting requirements. For many working families, the administration’s overregulated approach will add costly new burdens to an already convoluted system.
As the Washington Post notes, there should be a “common sense” approach to ensuring financial advisors work in the “best interests” of their clients. However, the administration’s proposal isn’t it. Fortunately, Republicans and Democrats in Congress have presented a responsible alternative that would strengthen the retirement security of low- and middle-income families by:
- Raising the bar for the retirement services industry by requiring advisors to serve in their clients’ best interests;
- Requiring advisors to clearly communicate key information to ensure investors are well-informed to make investment choices; and
- Ensuring that individuals and families saving for retirement have access to advice and investment options to meet their individual needs and circumstances.
As the department is expected to finalize its complicated regulatory proposal in the coming weeks, Congress has offered a responsible, common sense approach. The question remains—will the department?
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