The repeal and replace movement is alive and well, at least in financial services.
The House Education and Workforce Committee announced the Affordable Retirement Advice and Savers Act (H.R. 2823), a bill that would repeal and replace the controversial fiduciary rule.
“Far too many men and women are leaving the workforce without the financial security they need when they retire. In fact, according to a report by the Government Accountability Office, 29 percent of households with individuals over the age of 55 have no retirement savings or traditional pension. Now more than ever, we need policies that make it easier for Americans to successfully plan for their retirement years,” said a statement issued by the committee.
The fiduciary rule – which is currently being phased in – elevates investment professionals who handle retirement plans to the role of a fiduciary, legally obliged to act in the best interests of their clients, and to put their clients’ interests above their own.
This is the second announcement of a bill to repeal and replace the fiduciary rule in less than a week.
Last week, Congresswoman Ann Wagner rolled out her draft bill – with a hearing in front of the Financial Services Committee – which would repeal the fiduciary rule and replace it with new disclosure rules for all broker/dealers, not merely those who work with retirement plans.
“America is in a retirement savings crisis today, and Washington needs to be empowering individuals to save for retirement not making it more difficult,” Wagner said at the hearing, adding, “I have provided a workable best interest standard for broker/dealers.”
Wagner’s plan is likely to be controversial, as it allows for broker/dealers to have certain conflicts of interest in their advice, provided the conflict is disclosed; for instance, advisors can steer clients to products which maximize their commissions as long as those costs, compared to the costs of other products, are disclosed.
The Affordable Retirement Advice and Savers Act would also repeal the fiduciary rule while replacing it by adding and clarifying the disclosures that would have to be signed before a retirement account could be opened.
The fiduciary rule has found itself in committees which don’t traditionally have securities jurisdictions because the Department of Labor is implementing it, one of the criticisms of the bill.
The Affordable Retirement Advice and Savers Act, which passed out of the Education and Workforce Committee with a vote of 23-17, now heads to the full House of Representatives where it should pass before moving on to the Senate where, like much of Trump’s agenda, it faces uncertainty.
Wagner’s bill has not been introduced yet but will shortly be debated in front of the House Financial Services Committee; it’s likely to pass the committee and the full house before suffering a similarly uncertain fate in the Senate.
In January, President Trump issued a much heralded executive order which – among other things – delayed implementation of the fiduciary rule until June, but he’s done nothing since then, and the Labor Department has been implementing it since June.