Investment Advice Bill Could Face Tough Sledding In The Senate
By Steven Brostoff
Legislation that would allow insurance companies and agents to provide investment advice to pension plan participants is advancing, but may face tough going in the Senate.
The House of Representatives last week approved H.R. 2269, the Retirement Security Advice Act, by a 280-144 vote.
The bill would allow those that already provide certain services to qualified plans to also provide investment advice to plan participants, subject to strict disclosure requirements regarding compensation and possible conflicts of interest.
H.R. 2269 was strongly praised by Labor Secretary Elaine L. Chao, who calls the bill an important tool to help workers better manage their retirement savings.
“President Bush and the administration are working to ensure that every worker has access to a fulfilling and financially secure retirement,” she says.
“I look forward to seeing the Senate take the next step and pass this legislation as soon as possible,” Chao adds.
But David Winston, vice president of government affairs for the National Association of Insurance and Financial Advisors, Falls Church, Va., says H.R. 2269 may have problems in the Senate.
He praised the House for passing the legislation, noting that 64 Democrats voted in favor of it. That, Winston says, gives H.R. 2269 bipartisan momentum going into the Senate.
However, he notes, Sens. Jeff Bingaman, D-N.M., and Susan Collins, R-Maine, are backing a different version of the bill, S. 1677.
This bill would hold harmless employers that sponsor plans if they hire “qualified” advisors to provide investment advise.
The term “qualified advisors” is defined as registered investment advisors, registered broker/dealers and individuals at insurance companies and banks who are registered to give investment advice.
Winston says this would exclude state licensed agents.
Winston notes that groups such as the American Association of Retired Persons and the AFL-CIO support the Senate version.
Thus, despite its bipartisan support in the House, H.R. 2269 will face tough sledding in the Senate, Winston says.
Angela Arnett, senior counsel with the American Council of Life Insurers, adds that the language of S. 1677 will not allow ACLI member companies that currently provide services to pension plans to also provide investment advice, even though these companies are the most qualified to do so.
She says the approach taken by S. 1677 will not accomplish the purpose of making professional investment advice more readily available to plan participants.