Five years ago, when the Department of Labor first issued an extreme proposal to rewrite the rules governing investment advice, House Republicans made a commitment to workers and small businesses—that we would do everything in our power to protect access to affordable retirement advice. And we’re following through on that commitment.
After five years of raising bipartisan concerns with a controversial “fiduciary” proposal that was written behind closed doors, the House will soon vote on a resolution (H.J. Res 88) to stop this new regulatory scheme before it wreaks havoc on America’s middle class.
As Rep. Phil Roe (R-TN) stated during a House Committee on Education and the Workforce markup of the resolution, “We agree that retirement advisors should serve their clients’ best interests … The problem lies in how the department thinks we should do that.” Unfortunately, the administration’s flawed approach will hurt the very people they purport to help. Here’s how:
- Make it harder for low- and middle-income families to save for retirement. Costly new mandates and burdensome regulations imposed on financial advisors will drive up the cost of retirement advice. As a result, those who need the most help planning for retirement—low- and middle-income families—may no longer be able to afford any advice at all. At a time when 12.3 million Americans hold less than $25,000 in their retirement accounts, we need policies that empower families to save more, not less.
- Restrict the ability of individuals to receive some of the most basic financial advice. The rule severely restricts the advice and educational materials investment professionals can provide. Offering some of the most basic assistance would be much more difficult, including information on rolling over funds from a 401(k) to an IRA.
- Leave many Americans with no choice but to search for financial assistance online. Americans who can no longer afford retirement advice or who lose access to their trusted financial advisor may be forced to fend for themselves and search for the information they need online. But if the administration thinks investors will be satisfied managing their retirement portfolios through online sources, they didn’t check with the American people. A Gallup poll released earlier this year found that most investors would rather have a personal relationship with a trusted financial advisor.
- Create new hurdles for small businesses that will have to pay more to offer their workers retirement options. Small businesses provide nearly half a trillion dollars in retirement savings for 9 million American families. But under this new convoluted regulatory scheme, it will be far more difficult—if not impossible—for them to continue doing so. Many small businesses could be shut out of retirement advice altogether or face significantly higher fees to continue offering their employees savings options. And once again, it’s the workers who depend on those small-employer plans who will be hurt the most.
These are consequences American workers and small businesses simply cannot afford, and they are consequences we can stop before they become reality. Under the
Congressional Review Act, Congress may pass a resolution of disapproval to prevent, with the full force of the law, a federal agency from implementing a rule. Rep. Roe’s resolution to block the fiduciary rule would do just that, and House Democrats should join this important effort. Together, we can block a harmful rule, and get back to advancing
real solutions that will help all Americans access affordable retirement advice and retire with the peace of mind they deserve.
