U.S. Reps. Ann Wagner (R-MO) and French Hill (R-AR) denounced a proposal by the U.S. Department of Labor that they say negatively impacts the nation’s competitive financial services system by making it more expensive for Americans to invest for retirement.
The lawmakers recently joined U.S. Rep. David Scott (D-GA) to express their concerns in a letter sent to Acting Labor Secretary Julie Su and Assistant Secretary for Employee Benefits Security Lisa Gomez about the U.S. Department of Labor’s (DOL’s) proposed “Retirement Security Rule: Definition of an Investment Advice Fiduciary,” published in the Federal Register on Nov. 3, 2023.
The proposed rule, according to DOL, aims to protect workers’ retirement savings by updating the regulation defining a fiduciary under the Employee Retirement Income Security Act (ERISA), and would affect how investors get advice on their job-based retirement accounts and other retirement savings plans and how investment advice providers must act if they have a conflict of interest.
On the contrary, the lawmakers wrote that the DOL proposal “includes significant, unnecessary, and counterproductive changes to the existing regulatory framework governing the conduct of financial professionals who provide personalized investment advice to retirement savers” under both ERISA and the federal Tax Code.
The representatives also pointed out that the DOL’s previous efforts to expand these rules, which federal courts have repeatedly rejected, dealt “a devastating blow” to millions of American workers and retirees by impairing their ability to obtain affordable financial professional help to prepare for retirement.
“We urge DOL to cease its efforts to adopt this proposal in order to prevent needlessly inflicting harm on millions of retirement savers across the country,” wrote Rep. Wager, Rep. Hill, and their colleague.
If adopted, they wrote that DOL’s rule could cause a large number of financial professionals, who now serve a broad range of customers, to switch to providing service as investment advisers, rather than as insurance agents or registered representatives of a broker-dealer to avoid more severe risks and burdens.
“Investment advisers charge ongoing advisory fees and impose account minimums that low- and moderate-income workers and retirees cannot afford, causing them to lose access to any financial professional,” they wrote.
Rather than pursuing a “problematic and counterproductive rulemaking effort,” the lawmakers suggested that DOL focus its resources and efforts on implementing the retirement security provisions enacted by Congress in recent years through the SECURE Act and SECURE 2.0 Act.
“These bipartisan legislative measures provide clear and appropriate opportunities for DOL to help America’s workers and retirees have opportunities to build their retirement nest eggs and enjoy a financially secure retirement,” they wrote.