In a hearing Tuesday, lawmakers examined how workers should receive employer-sponsored access to retirement advice.

Members of the House Education and Labor Committee have emphatically argued against U.S. Labor Department rules adopted in the final days of the Bush administration that allow workers to receive retirement investment advice from employer-sponsored financial services firms. Lawmakers say any retirement advice – especially in a time when retirement assets have diminished significantly – should be given without bias and in the best interest of the client, not the investment firm.

“The rules … govern when and how pension fund advisers must disclose conflicts of interest and when they are exempt from doing so,” according to the Associated Press. “Under the rules, a worker can get retirement investment advice from a financial adviser who uses a computer model that is certified as being unbiased. The rules also would require financial advisers to be paid the same no matter what products they offered, and disclose any monetary gains they would receive if a worker chose to participate in a certain investment plan.”

While advocates say workers will be protected from receiving biased advice, critics argue under the new regulation, advisors will be able to steer investors to products that will be more profitable for the advisor, not the client.

“Unfortunately, employers fear liability for providing advice to employees, and reducing this liability risk has been viewed as essential to ensuring that participants have the guidance they need to make prudent investment decisions,” said Mercer E. Bullard, president and founder of Fund Democracy, Inc., in a written testimony. “This does not mean, however, that employers should have no responsibility for exercising reasonable care in selecting advisers for their employees.”

“The conflicted advice exemption not only will permit and promote conflicted advice; it also will suppress independent advice in the DC plan marketplace,” Bullard continued.

The U.S. Department of Labor announced Monday it would postpone the rule for 60 days – until May 22 – to review issues raised by proponents of the regulation. The ruling is a an amendment to the Employee Retirement Income Security Act, which the Department of Labor says will allow for “greater flexibility” for 401(k) and IRA participants to receive investment advice.

View the testimony here:

Ken Baker
Corporate Director of Human Resources
Applied Extrusion Technologies
Terra Haute, Ind.

Mercer Bullard
Founder and President
Fund Democracy
Nonprofit Advocate for Mutual Fund Shareholders
Oxford, Miss.

Sherrie Grabot
CEO GuidedChoice
Los Gatos, Calif.

Charles Jeszeck
Assistant Director
Education, Workforce and Income Security Issues
U.S. Government Accountability Office
Washington, DC

Melanie Nussdorf
Partner Steptoe & Johnson LLP, on behalf of SIFMA
Washington, DC

Andrew L. Oringer
Partner White and Case, LLP
New York, N.Y.