Publisher's Synopsis
Chairman ROSKAM. The hearing will come to order. Welcome to the Ways and Means Oversight Subcommittee hearing on the Department of Labor's fiduciary rule proposal. I know that everyone on this dais agrees that, given all the economic challenges of our economy, saving for a secure retirement is more important than ever. Last April, the Department of Labor issued a proposed rule that would drastically expand the definition of a fiduciary. The administration says this is a regulation that will protect people from bad financial advice, and, while that is a good thought and an objective that we can all support, but you know what they say: The road to hell is paved with good intentions. The reality is that this regulation would prevent many people from getting any investment advice at all because the rule would essentially hold anyone giving retirement advice of any kind to the standards of a fiduciary, with all of the legal implications and the complexity that that entails. The reason we don't have such a standard right now is because it would make it extremely difficult for people to access financial advice without having to pay costly fees. Small businesses, low- and middle-income families, and underserved communities would be hurt by this rule far more than the wealthy. That is because the majority of small investors use financial advisors called broker-dealers, who typically work on a commission basis instead of charging fixed fees up front. Brokers are a major provider of retirement and investment advice. Although they are not considered fiduciaries, they are held to a high standard which requires them to provide advice that is suitable for their clients' financial interests.
