Despite widespread support for a measure that would force brokers to put their clients’ best interests first when managing retirement accounts, it appears that the powers on Wall Street are poised to get their way once again.
The House Appropriations Committee introduced a bill on Tuesday that would effectively stop the Department of Labor’s (DOL) fiduciary standard proposal.
The condition is part of a $153 billion dollar plan that would fund the Department of Labor, the Department of Health and Human Services and many other government agencies for fiscal year 2016.
Under this new law, DOL would be forbidden to spend any funds in order to revise, finalize or ultimately implement the fiduciary rule. Experts on Capitol Hill believe the House Appropriations subcommittee will approve this suggestion on Wednesday, which would send it to the full House of Representatives for further action.
The measure comes one day before Department of Labor Secretary Thomas Perez was set to testify before the House Committee on Education and the Workforce about proposed amendments to the rule.
Predictably, proponents of the rule are disgusted by this latest development. Dennis Kelleher is the President and CEO of Better Markets. Kelleher is set to testify alongside Perez later today.
“This new bill would put Wall Street brokers’ interests above the best interests of hardworking Americans who are just trying to save for retirement,” he lamented. “Legislation to stop the proposed DOL rule from protecting retirement savers turns the law upside down and protects brokers’ bonuses. That’s just wrong.”
Wall Street-based critics say the fiduciary rule would expose brokers to significant risks of liability, while forcing them to abandon investors with ‘modest’ retirement accounts.
“The legislation includes several provisions designed to help U.S. businesses create jobs and grow the economy by reducing or eliminating overly burdensome government regulations,” the House Committee said in its bill summary.
As disappointed as they are, supporters of the DOL’s bill don’t seem surprised by the latest tactics of lawmakers and brokers to avoid the fiduciary standard at all costs.
“The only reason to defund the DOL’s effort is if you’re prioritizing the concerns of financial firms over the very real struggles of American workers and retirees,” said Barbara Roper, director of investor protection at the Consumer Federation of America and a well-known advocate for fiduciary responsibility across the industry.
It is believed that the House will approve the bill, but experts believe it could face some opposition in the Senate. The House committee, however, is prepared for such delays and has already suggested attaching the anti-fiduciary provision to alternate legislation.
“If this rider is on a bill the president is forced to sign—that’s a real threat,” summarized Roper.
This past May, I spoke with Barbara Roper on the Crash Proof Retirement Show. We discussed how the financial services industry designs products to specifically benefit themselves and not the consumer.
There are steps you can take to force a fiduciary responsibility on your advisor. Here’s more from our exclusive interview with Barbara Roper.