Retirement security is a difficult challenge facing millions of Americans. Unfortunately, misguided regulatory policies often make matters worse.
The latest example is the Department of Labor’s flawed "fiduciary" rule. For years, many warned this rule would hurt the very people it’s intended to help. In fact, Rep. Phil Roe (R-TN) cautioned over a year ago:
Make no mistake, if this rule goes into effect, a lot of people will quickly learn that their financial adviser—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.
Even Democrats echoed similar concerns. And now, the consequences many feared are beginning to take shape. Already, families relying on State Farm have been put on notice that they’ll soon lose access to their trusted financial advisors and be left with a “self-directed call center.” Low- and middle-income Americans will face fewer choices and higher fees as other investment professionals are forced to change the way they serve clients because of this convoluted new rule. The Wall Street Journal explains:
Now a new rule from the Labor Department concerning retirement accounts is pushing brokers to decide whether to continue, or nix, the use of commissions … [A] move away from commission accounts could mean investors may now end up paying more in fee-based accounts.
The American people deserve retirement advice that’s in their best interest, but because of this flawed rule, many working families will soon have no advice at all. The Wall Street Journal adds:
Retirement savers also have the option of moving their account away from full-service brokerages like Merrill and Morgan Stanley to self-directed IRAs or an automated robo adviser that relies on an algorithm to provide advice, both of which aren’t significantly affected by the Labor Department’s rule. Those options, especially a self-directed account, would mean investors no longer have access to advice.
When it comes to a matter as important as retirement security, Americans need personal advice to help guide their decision-making—not an “algorithm.” Indeed, they need more options, not fewer. That’s why House Republicans are committed to strengthening protections for retirement savers. And it’s why we put forward A Better Way to help families access affordable retirement advice and achieve the financial security they need for the years ahead.