WASHINGTON—Congressional Progressive Caucus (CPC) Co-Chairs Reps. Raúl Grijalva (D-AZ) and Keith Ellison (D-MN) released the following statement today after the White House announced that the Department of Labor is moving forward with a rule to expand the definition of retirement investor advisors who must put their clients’ interests first.
“We applaud President Obama and Secretary Perez's bold move to protect working Americans saving for retirement from financial advice that is not in their best interest. Every month the industry lobbyists who tried to stop this rule cost American savers as much as $1.4 billion dollars in overpaid fees and hidden commissions.
“When workers leave a job, they can be encouraged to roll over their low-cost, quality employer-based retirement account into an IRA. Too frequently, working Americans do not realize the IRA they are being offered is actually a product that they are being sold. The product could have higher fees and worse investment options than the plan they had. Under current law, the person selling the plan to the worker does not have to put the client’s best interest first. That’s just wrong. The Department of Labor is siding with retirees to hold financial advisors to a higher standard.
“Seniors are facing choices that will determine the security of their retirement. The rule proposed today improves the retirement investment marketplace and requires financial advisors and broker dealers to work in their client’s best interests.
“Expanding Social Security benefits, providing investor protections for consumers, and strengthening the private pension system are all important things government can do to create a system that ensures America’s seniors will be able to retire with security and dignity. The CPC supports the President’s actions today and encourages him to propose the strongest possible rule.”
By updating the definition to include advisors who encourage workers to roll their employer-sponsored retirement accounts, 401(k)s, 403(b)s, etc., into IRAs, the proposed rule will protect working families from high fees, hidden commissions and inferior product choices The Department of Labor will soon seek comments on a rule that promotes transparency, accountability and minimum conflict of interest. The proposed rule is expected to still allow advisors to give general advice and to give investors the option of choosing different types of fee-based advice plans. The proposed rule is not expected to prohibit commissions or revenue sharing.
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