Saving up for a rainy day – whether it’s a few quarters in your piggy bank as a child or investing in a retirement plan as an adult, many of us have heard from a young age about the importance of saving for the future. Saving is important to your financial security and independence. However, for many men and women who have worked their entire lives, every penny saved for retirement is a challenge.
Another one-size-fits-all regulation from the Obama Administration may make mapping your financial future and planning for retirement all the more challenging. A recent proposed rule from the Department of Labor broadens the definition of a “fiduciary,” or someone entrusted with providing you financial advice, under the guise of protecting consumers. This rule, which may be finalized as early as this month, imposes new regulatory requirements and mandates on financial advisors. Financial advisors will face increased compliance requirements, costs, and liabilities. In turn, they may consequently increase the cost of their services or stop offering services to some businesses or individuals entirely. The result would be fewer hardworking, middle class Americans with access to affordable investment advice.
While I agree with the need for consumer protection and want to ensure that financial advisors act in the best interests of their clients, I am greatly concerned that this rule goes far beyond that intent and fails to take real world implications into consideration. A recent study found that the Department of Labor’s rule will “adversely impact individual investors saving for retirement.”
In October, the House of Representatives passed, with my support, the Retail Investor Protection Act, to delay the rule and protect the retirement security and investment choices for all Americans. It now awaits Senate action. Additionally, the Affordable Retirement Advice Protection Act and the Strengthening Access to Valuable Education and Retirement Support Act have already passed their respective House committees. These bills outline alternatives to the fiduciary rule and also require Congress to approve the rule before it goes into effect.
Objections to the rule are not just coming from Republicans. All three of these bills received bipartisan support, and 100 Democrats sent a letter to the Department of Labor expressing concerns about this rule. However, the Administration is moving full steam ahead.
I am open to a solution that will protect the best interests of those planning for retirement. But we must take the time to get it right. This should not be the next Obamacare, rushed through just to check a box. Those who are trying to save for retirement need access to affordable investment advice and a financial advisor who best fits their needs. I will continue working to stop this rule in its tracks, and I urge the Department of Labor to push the brakes as well. The federal government shouldn’t be in the business of discouraging retirement savings.
Bob Goodlatte represents the Sixth District of Virginia in Congress.