A House panel advanced legislation Wednesday that would preempt a forthcoming Department of Labor rule meant to reduce conflicts of interest among retirement advisers.
The Ways and Means Committee voted 26-12 to advance the SAVERS Act, which would establish a definition of which advisers are required to act in their clients’ best interest separate from the definition the Labor Department is expected to institute. The Labor Department rule is thought to be coming in the next few months.
Three Democrats voted in favor of the legislation: The bill’s co-author, Rep. Richard Neal of Massachusetts, Rep. John Larson of Connecticut and Rep. Mike Thompson of California.
The rule, a priority for President Obama and congressional liberals such as Sen. Elizabeth Warren, D-Mass., would aim to broaden the group of investment professionals required to be fiduciaries to their clients. The White House says workers lose $17 billion annually because non-fiduciary advisers steer them into inappropriate high-fee investment products to receive kickbacks from the companies selling the products.
Republicans and some Democrats have warned that the rule would lead some small businesses to lose access to their advisers.
The bill advanced Wednesday would spell out a new form of contract that advisers could sign with clients to exempt them from the fiduciary standard and set standards for disclosure of potential conflicts.
Rep. Peter Roskam of Illinois, the Republican co-author of the legislation, said at the bill’s mark-up that it “ensures individuals saving for retirement can continue to access a wide variety of investment products and services, including annuities.” He added that it would not force savers into fixed-fee arrangements with advisers, which have higher upfront costs.
Proponents of a strengthened fiduciary standard have argued that the legislation would not do enough to protect savers.
On Wednesday, Democrats also argued that the Republican-led panel was acting out of turn by writing legislation before the Labor Department announced its final rule.
Neal, however, said that he hopes that moving the legislation will “ever so gingerly nudge the Labor Department into reaching an accommodation and an agreement with the duly elected.”
The House Education and the Workforce Committee passed the bill Tuesday.
Separate legislation to effectively block the fiduciary rule, sponsored by the House Financial Services Committee, has passed the House.
