Vote Explanation for H.J.RES. 88 — Disapproving the rule submitted by the Department of Labor relating to the definition of the term “Fiduciary”
Earlier this month, the Department of Labor (DOL) issued and published a new rule designed to ensure that retirement advisors put the best interests of their clients above their own financial interests. It would do so by defining anyone who receives a commission from the sale of certain retirement plans as a “fiduciary adviser.”
Numerous studies have estimated that the retirement gap — the difference between Americans retirement income and actual expenses — is between $7 and $14 trillion. In fact, one-in-five Americans is approaching the age of retirement with insufficient savings. Loopholes in current law allow financial advisors to recommend products and retirement investments that may not be in their client’s best interests. According to a study done by the White House Council of Economic Advisors, retirement advice that is not in the client’s best interest has cost the American people an estimated $17 billion a year and can result in the loss of nearly twenty percent of a retiree’s savings.
The DOL significantly improved the rule from the time it was initially proposed in 2010, and it is the product of extensive public input from financial advisors, consumer advocates, and other stakeholders. During the rule-making process, I joined my Democratic and Republican colleagues in the House to encourage the agency to take a balanced approach in both protecting consumer interests while not restricting access to retirement advice for lower and middle-income Americans. I am pleased to see that the final rule achieves that balance.
This legislation is a Republican effort to nullify the DOL’s fiduciary rule a mere 21 days after it was published in the Federal Register. This is nothing more than a hasty attempt to stop a rule that was transparently crafted over the past several years in conjunction with industry professionals and the public. Moreover, the resolution would block future administrations from issuing a similar rule.
While no law or rule is ever perfect, I firmly believe that the DOL’s fiduciary rule is a true compromise that protects retirees, ensures that financial advisors act in the best interests of their clients, and encourages consumer choice. That is why I voted against H.J.RES. 88.