Just days before lawmakers begin debating a spending bill that is said to include riders to defund the Department of Labor’s efforts to change the definition of fiduciary on retirement accounts, supporters of DOL’s plan urged House lawmakers on Wednesday not to introduce a measure to block it.
During a hearing held by the House Subcommittee on Health, Employment, Labor and Pensions to discuss legislation based on a “declaration of principles” proposed by Reps. Richard Neal, D-Mass, and Peter Roskam, R-Ill., the Financial Planning Coalition told lawmakers that such a bill was “unnecessary and would weaken, not strengthen” the fiduciary standard under the Employee Retirement Income Security Act.
Roskam, a member of the House Ways and Means Committee, is co-sponsoring with Neal as well as Phil Roe, R-Tenn., and Michelle Lujan Grisham, D-N.M., a bill that sets out a series of legislative principles that they say will “help strengthen the retirement security of working families and ensure retirement advisors protect their clients’ best interests.”
Roskam said Wednesday during an event held by the National Association of Insurance and Financial Advisors that the lawmakers are “building more bipartisan support” for the bill, but did not state when such a bill would be introduced.
He stated in late November, however, that he was bent on moving the bipartisan legislation through the House and Senate.
Rep. Phil Roe, R-Tenn., chairman of the subcommittee, said during his opening remarks that he is working with Roskam and the other lawmakers to “develop a legislative solution that will accomplish what the Department of Labor has failed to.” The proposal, he said, “will strengthen retirement security, but, unlike the department’s approach – it will do so without hurting working families and small businesses.”
While DOL “listened” five years ago and pulled its first fiduciary rulemaking, Roe said, the DOL “seems determined to ignore legitimate bipartisan concerns” the second time around.
But Marilyn Mohrman-Gillis, managing director of public policy and communications for the Certified Financial Planner Board of Standards, urged lawmakers during her Wednesday testimony to let DOL release “a final rule, and then take a look at it” to see if there are problems with it. “It’s well past time” for DOL to update the 40-year-old ERISA, she said, adding that “DOL is attempting to update a rule to effectuate congressional intent.”
A DOL spokesman agreed, stating Wednesday that “instead of undermining public confidence in the rulemaking process, members of Congress who are genuinely interested in protecting the savings of America’s workers should wait to see the results of the Department’s incredibly open and thorough process before proposing legislation on this issue.”
But Brad Campbell, an ERISA lawyer and former head of DOL’s Employee Benefits Security Administration, told the House lawmakers that Congress “is the proper venue” to resolve the host of problems in DOL’s plan.
“We have no idea how DOL will address about 40 or 50 issues” in the proposal, Campbell said, including how it may likely conflict with any fiduciary rule proposed by the Securities and Exchange Commission.
Added Campbell: “The costs that they [DOL] estimate for compliance [with the rule] are laughable.”
Mohrman-Gillis noted that while “there’s a lot of speculation about what the rule will look like, we have full confidence that [DOL has] taken all the input and will come out with a more streamlined rule.”
The DOL spokesperson argued that the “substantial outreach” the Department has held during the rulemaking process “has worked.”
The Department, the spokesperson said, “received extensive feedback and comments on the proposal itself, and often praise for the inclusiveness and transparency of our robust outreach process. Ironically, the efforts by some members of Congress jettison the transparency and inclusiveness they correctly demanded, instead favoring a process of closed-door deliberations dominated by lobbyists and industry insiders. As a result, we should expect a product that is ultimately less protective of middle-class retirement savers.”
The Consumer Federation of America said the same day that its own analysis of the alternatives to DOL’s plan—including the “principles” set out by Roskam and the other lawmakers — falls short in two critical areas that are addressed in DOL’s plan.
The alternatives, CFA argues, do not apply to the full range of services “perceived and relied on as objective investment advice by retirement savers, and are not backed by restrictions on compensation and other practices that encourage and reward advice that is not in the customer’s best interests.”
— Check out DOL Fiduciary Rule Nears the Finish Line on ThinkAdvisor.