Four members of the U.S. House of Representatives—two Democrats and two Republicans—have released an outline of legislation that would serve to replace the Department of Labor’s proposed fiduciary rule.
“We are concerned that the Department of Labor’s current fiduciary proposal may have unintended negative consequences that could harm individuals and families saving for retirement,” wrote the legislators in a release, issued by Representatives Phil Roe, R-Tennessee, Richard Neal, D-Massachusetts, Peter Roskam, R-Illinois, and Michelle Lujan Grisham, D-New Mexico.
The release does not say explicitly that the proposed legislation would stop the DOL from finalizing a rule.
But the lawmakers did issue seven principals on which their intended legislation would be based.
One principal says “public policies must protect access to investment advice and education for low and middle-income workers and retirees.”
Opponents of DOL’s fiduciary rule claim that the proposal’s extensive disclosure requirements on commission-based investment sales would force IRA providers to a fee-based model, which they could not accommodate for low-value accounts.
A recent Morningstar report suggested the rule would initiate an exodus of low-value IRA accounts from exiting brokers.
Ultimately, those accounts would be directed to robo-advisors, which Labor Secretary Thomas Perez has often touted as a conflict-free alternative to the existing brokerage industry.