Reintroduces legislation to stop big-government ‘fiduciary rule’
WASHINGTON – U.S. Senator Johnny Isakson, R-Ga., today reintroduced legislation to fight implementation of a misguided, big-government Obama-era rule that is scheduled to take effect tomorrow, June 9, that would harm retirement planning access for hardworking Americans.
Known as the “fiduciary rule” and found in the fine print of hundreds of pages of U.S. Department of Labor regulations, the Obama administration’s labor department sought to redefine the word “fiduciary.” Fallout from this misguided overreach is already resulting in increases in required minimum balances in retirement accounts and the loss of access to investment advice for thousands of Americans.
Isakson’s legislation, the Affordable Retirement Advice Protection Act, S.1321, would preserve access to quality financial planning and ensure that retirement advisors serve the best interests of low- and middle-income Americans. It would also amend the Employee Retirement Income Security Act of 1974 to raise investment advice standards for the retirement industry and strengthen protections for those saving for retirement.
“I will continue to fight the ‘fiduciary rule,’ because it is an obstacle to the American dream,” said Isakson, chairman of the Senate Subcommittee on Employment and Workplace Safety. “With its ‘fiduciary rule’ maneuver, the Obama administration presented a gift to the trial lawyers and cut the knees out from under hardworking Americans seeking meaningful advice for retirement planning. On one hand, we encourage and applaud planning, but this big-government regulation prices the advice of knowledgeable professionals out of reach for hardworking taxpayers in middle- and lower-income families.”
Isakson was joined by U.S. Senators Lamar Alexander, R-Tenn., Mike Enzi, R-Wyo., Orrin Hatch, R-Utah, Pat Roberts, R-Kan., Tim Scott, R-S.C., and Todd Young, R-Ind., as original co-sponsors of the legislation.
“Tennessee families hoping to make the most of their hard-earned income should have the peace of mind that the financial professional they hire has their best interests in mind,” said Sen. Alexander, R-Tenn., chairman of the Senate Committee on Health, Education, Labor and Pensions. “Unlike the previous administration’s so-called ‘fiduciary’ rule, Sen. Isakson’s legislation would provide commonsense protections in a way that doesn’t threaten low and middle-income Tennesseans’ access to affordable retirement advice and force families to work longer and retire with less.”
“The misguided fiduciary rule will hurt the exact people it is designed to help, putting average American families at a disadvantage by essentially limiting their access to financial advice,” said Enzi, chairman of the Senate Budget Committee. “The federal government supposedly wants to help families plan for their retirement, but then it puts unnecessary hurdles in their way. Our legislation would instead provide common sense rules to ensure that families can plan for the future affordably while feeling secure in the financial advice they receive.”
“I remain committed to exploring all viable solutions that will reverse this rule’s negative effects, including limiting access for everyday Americans to financial advisors and increasing costs in seeking expert advice on how to financially prepare for retirement,” said Hatch, chairman of the Senate Finance Committee.
“If fully implemented, the DOL’s fiduciary rule will make it more difficult for low and middle-income families, the very people this rule was intended to help, to save for retirement,” said Roberts. “It takes away the potential for millions of Americans to have a conversation with a knowledgeable and trusted professional on how to save for retirement and how to spend and re-invest when they reach that point in their life.”
“Hardworking American families deserve access to affordable and reliable investment advice,” said Scott. “In its current form, the Department of Labor’s fiduciary rule will limit a saver’s ability to acquire basic investment education and assistance. How are families supposed to grow their nest eggs, prepare for retirement, and take care of their children’s future if the federal government restricts how they receive financial counsel? While I remain disappointed by the Department of Labor’s decision to move ahead with the rule, I will push both the DOL and Securities and Exchange Commission to work together to minimize the damage it will do to the retirement security of everyday people.”
“Many hard-working Americans dream about being able to save enough to retire comfortably,” said Young. “We want to make it easier for people – of all incomes – to save and plan for their post-working years. However, the Obama Administration’s ‘Fiduciary Rule’ puts that in jeopardy. This is a classic example of big-government overregulation causing inadvertent harm to the very people it was intended to help. I applaud Sen. Isakson for his work to bring a commonsense approach to financial planning and I am glad to work with him on this effort.”
Isakson’s legislation seeks to block the Department of Labor’s harmful fiduciary rule and to provide a viable alternative that would:
Since the rule was announced by the Obama administration, Isakson has fought to prevent its implementation. Isakson has made multiple legislative attempts to overturn the rule and to require a vote from Congress before implementation of the rule. He questioned President Trump’s Labor Secretary, Alexander Acosta, at his confirmation hearing earlier this year and again called attention to this issue in a letter to Acosta that asked the secretary to conduct and finalize an exhaustive review of the final fiduciary rule before any part of the rule becomes applicable.
In May, Secretary Acosta announced the Department of Labor’s decision to allow the rule to proceed even while still under official review by the department. In response, Isakson penned a letter to the editor blasting the decision and urging the labor department to reconsider the move that was published in the Wall Street Journal on Friday, June 2, 2017.
Full text of the Affordable Retirement Advice Protection Act can be viewed here.
In October 2010, the Department of Labor proposed rewriting its regulatory definition of a “fiduciary,” allegedly to protect individuals from misleading investment advice. However, the administration later 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 again proposed a fiduciary rule in April 2015 that fails to address many of the concerns raised over the previous rule.
On January 28, 2016, the Department of Labor submitted its final fiduciary rule to the Office of Management and Budget.
On Feb. 3, President Trump recognized the flaws of this big-government regulation and directed the labor department to further study the new rule, originally scheduled to take effect on April 9. The department subsequently delayed the application of the fiduciary rule until June 9.
Secretary Acosta then announced that the department needs more time to consider its options for addressing this rule. However, following the current delay of the rule, this rule will go into effect despite some non-enforcement provisions designated by the Department of Labor.
Contact: Amanda Maddox, 202-224-7777
Marie Gordon, 770-661-0999