Today, Congresswoman Maxine Waters (D-CA), the top Democrat on the House Financial Services Committee, released this statement following the Biden Administration’s latest Department of Labor (DOL) “Retirement Security” rule proposal.
“I welcome the Biden Administration’s and the Department of Labor’s (DOL) release of the ‘Retirement Security’ rule proposal, which will strengthen critically needed guardrails and protect working families and retirees from conflicted financial advice. Today, working families and retirees are often charged junk fees, driven to costly, risky, and illiquid products, steered towards harmful trades, or encouraged to needlessly move their retirement savings, known as a roll-over. American investors lose billions of dollars annually because of bad and conflicted financial advice, while licensed professionals maximize their commissions and fatten their year-end bonuses. Let’s be clear, retirement savers and working families need to make every dollar count and can’t afford these risks, junk fees, and financial losses.
“I have long sounded the alarm on the need for strong regulations to protect our nation’s retirees from self-serving financial professionals, and there are gaps in the regulatory framework that need immediate addressing. For example, the Securities and Exchange Commission’s 2019 Regulation Best Interest (Reg. BI), which enhanced the standard of conduct for broker-dealers, does not apply to all financial professionals, all products, or all accounts. Additionally, because of loopholes in the definition of who is considered a fiduciary under the Employee Retirement Income Security Act of 1974, some financial professionals are allowed to provide investment advice without being held to the highest standard of care. This is unacceptable. With this proposed rule, the Department must close those loopholes to ensure that all financial professionals are required to provide advice that is in the best interest of retirement savers. It is important that this standard apply regardless of the type of financial professional that the retirement saver turns to or the type of product that a financial professional recommends.
“A strong DOL rule will have a tremendous impact for moderate-income and working families who are typically only able to save for retirement in the smallest amounts and need all the help they can get in safeguarding their retirement nest eggs from financial firms and professionals without their best interest at heart. I applaud the DOL for taking this much-needed step, and I look forward to continue working with the Department to ensure that working families and retirees’ interests are the North Star by which this effort is guided in the final rule.”