Our Saving Problem
Our country has a saving problem. In 2015, the GAO found that 29 percent of Americans 55 and older have no retirement savings and no traditional pension. In fact, today, nearly 40 million working families haven’t saved a dime for retirement. Reliable access to affordable and accurate financial advice is more important now than ever with a larger portion of our population reaching retirement age every day.
As I’ve noted several times before, the Obama administration’s Department of Labor (DOL) put forward a flawed regulatory proposal known as the “Fiduciary Rule” in 2015, despite vocal, bipartisan opposition. According to the American Action Forum, the fiduciary rule was the most expensive regulatory action of 2016 and will impose more than $46 billion in costs on retirement savers. Our oversight exposed this rule could cause the individuals who are in the most need of sound financial advice to lose access to trusted financial advisors; it could raise the cost of receiving financial advice; and it could lead to fewer small businesses offering retirement plans. Don’t just take my word for it: just last month, former Treasury Secretary Jack Lew was quoted saying that the fiduciary rule may result in “pricing smaller investors out of the financial advice market.”
It is imperative that we root out bad actors in the financial industry and strengthen protections for those saving for retirement, but I believe we can do so in a commonsense way. That’s why this week the House Committee on Education and the Workforce marked up H.R. 2823, the Affordable Retirement Advice for Savers Act, my legislation to replace the flawed fiduciary rule with workable, enhanced protections for retirement savers. It would do this by raising the bar for the retirement services industry by requiring retirement advisors to serve in their clients’ best interests. The bill also penalizes financial professionals who violate the trust of their clients; requires advisors to clearly communicate key information to ensure investors are well-informed; and ensures individuals and families saving for retirement have access to advice and investment options that meet their needs and particular circumstances.
Some have said there’s no need for action because some brokerage firms have said that they will continue being able to service accounts under the rule. No one doubts that investment advice will continue for large accounts and wealthy individuals, but who will give advice to an individual who is setting up an IRA for the first time if advice is moved to fee-based advisory accounts? One or two percent of $2,000 dollars is not sufficient incentive for an advisor to service an account when their risk has substantially increased. Advice for the wealthy will continue, but the message this rule sends to small businesses and small investors is simple: you’re on your own. So the very people the DOL claimed to want to help are the people who are losing access to advice.
We aren’t going to get out of our retirement crisis by leaving savers to fend for themselves. I am proud to work with Chairwoman Virginia Foxx and the House Committee on Education and the Workforce on this very important piece of legislation that will help ensure all Americans have access to affordable retirement advice.As always, feel free to contact my office if I can be of assistance to you or your family.