News Releases

Tuesday, July 21, 2015

Isakson to Labor Secretary: Proposed Fiduciary Regulation 'a Solution in Search of a Problem'

Urges continued access to affordable retirement services for low- and middle-income Americans

WASHINGTON – U.S. Senator Johnny Isakson, R-Ga., chairman of the Senate Health, Education, Labor and Pensions Subcommittee on Employment and Workplace Safety, today urged the administration rethink its proposed investment and retirement savings regulation, known as the fiduciary rule, arguing that the regulation would add burdensome red tape that would limit access to low-cost financial education and guidance services.

Isakson called the hundreds of pages of proposed Department of Labor regulation that seek to redefine the word “fiduciary” a “solution in search of a problem” that would deny millions of Americans the opportunity to plan for retirement.

“A comfortable retirement is part of the American Dream. Unfortunately, the fine print included in hundreds of pages of Department of Labor regulations that seek to redefine a single word would deny millions of Americans the chance to plan ahead,” said Isakson. “The new rule would limit access to investment advice for the families who need it most and in my opinion is a solution in search of a problem.”

During a subcommittee hearing held today, Department of Labor Secretary Anthony Perez testified before Isakson’s subcommittee about the proposed fiduciary rule, which is intended to ensure those who provide investment advice on retirement savings must act in what the federal government determines to be the best interest of investors or forfeit their income and face potential lawsuits. Isakson argued that the over-burdensome regulations will have the opposite effect, and could prevent many low- and middle-class Americans from being able to access affordable investment advice.

“The standards that are meant to protect investors from devious salespeople are so onerous that many investors will be prevented from getting advice at all,” Isakson continued. “In addition, savers, including those with relatively low incomes, will find themselves with far fewer investment choices.”

Isakson believes the administration’s proposal is counterproductive to its intended goal of increasing retirement savings participation and providing employers with the tools necessary to help them provide plans for their employees. While Congress could be open to modernizing some of these rules, Isakson stated that he cannot support a proposal that makes it harder for low- and middle-income families to save and plan for retirement. 

“Middle class families should have a choice who to work with to get financial help,” Isakson said. “Big government policies that cause the middle class to lose this choice will make our retirement crisis worse. That’s what this new rule will do. It will hurt the average Americans it was supposed to help. The Obama administration should rewrite it before it becomes final in a few short months.”

Background:

In October 2010, the Department of Labor proposed rewriting its regulatory definition of a "fiduciary" to protect individuals from misleading investment advice. However, the administration withdrew its rule amid widespread, bipartisan criticism that the proposal would essentially prevent lower- and middle-income investors from gaining access to the advice market and would likely result in confusion and ultimately discourage savings participation.

Despite these concerns, the Department of Labor re-proposed a fiduciary rule earlier this year that fails to address many of the concerns raised over the previous rule.

The Department of Labor has collected public comments on the proposed rule and plans to hold hearings on it shortly. No date has been set for final adoption of the proposal.

Today, July 21, 2015, the first comment period closes on the fiduciary rule.

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