West STL News

Jan 10, 2024

Reps. Ann Wagner (R-MO), French Hill (R-AR), and David Scott (D-GA) have sent a letter to the Department of Labor expressing their concerns about the proposed fiduciary rule. The lawmakers argue that the rule will burden investors and limit access to financial retirement products.

In their letter, the lawmakers outlined several concerns about the fiduciary rule. They believe that the rule would harm lower and middle-income workers, ignore federal court rulings, and hurt workers and retirees. They argue that the proposal makes it more expensive to invest for retirement and is not suitable for the competitive financial services system that encourages long-term financial growth.

The lawmakers specifically highlight the harm that the proposed rule would cause to lower and middle-income workers. They state that the fiduciary definition in the proposal goes further than the 2016 fiduciary rule, which was invalidated by a federal appeals court ruling. The proposed rule would impose fiduciary status on any financial professional who recommends financial products, which would result in many financial professionals switching to providing service as investment advisers. This would leave low- and moderate-income workers and retirees without access to any financial professional.

Furthermore, the lawmakers point to a study that found that more than 10 million smaller retirement account owners lost the ability to work with financial professionals under the 2016 fiduciary rule. They also highlight a more recent analysis that predicts a new rule similar to the 2016 rule would cause the retirement savings of 2.7 million individuals with incomes below $100,000 to plummet by $140 billion over ten years. The analysis also suggests that people of color, particularly Black and Latino retirement account owners, would be among the hardest hit, increasing the racial wealth gap by 20 percent.

The lawmakers argue that conflicts of interest in the industry are being adequately addressed by existing regulations. They point to the U.S. Securities and Exchange Commission's adoption of Regulation Best Interest, which requires broker-dealers and their registered representatives to always act in their client's best interest. They also mention the updated National Association of Insurance Commissioners model regulation, which requires insurance producers to satisfy a best interest standard. The lawmakers believe that there is no evidence to suggest that these regulations are not working effectively to protect retirement savers and therefore, there is no need for the proposed rule.

The lawmakers also criticize the Department of Labor for ignoring federal court rulings. They argue that the proposed rule extends fiduciary duty to all who make recommendations, disregarding the distinction between investment advice and sales established by the courts. They call on the Department of Labor to respect the limits set forth by Congress and abide by the decisions of the federal courts.

Finally, the lawmakers urge the Department of Labor to focus on implementing new retirement security laws instead of pursuing the proposed fiduciary rule. They believe that the resources and efforts of the Department should be directed towards implementing the retirement security provisions enacted by Congress in recent years.

In conclusion, Reps. Wagner, Scott, and Hill have expressed their concerns about the Department of Labor's proposed fiduciary rule in a letter. They argue that the rule will burden investors and limit access to financial retirement products, particularly for lower and middle-income workers. The lawmakers believe that conflicts of interest in the industry are already being addressed by existing regulations and that there is no need for the proposed rule. They call on the Department of Labor to withdraw and cease efforts to adopt the rule and instead focus on implementing new retirement security laws.

For additional details, please follow this link: https://wagner.house.gov/media-center/press-releases/release-reps-wagner-scott-and-hill-send-letter-department-labor-about