NAFA Alert – Recent Federal Activity Regarding DOL Proposed Fiduciary Rule

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On November 4, 2015, Representative Mike Kelly (R-PA), a member of the House Ways and Means Committee and Chairman of the House Retirement Security Caucus, and Representative Sam Johnson (R-TX), Chairman of the House Social Security Subcommittee, introduced H.R. 3922, the Retirement Choice Protection Act of 2015 The legislation offers an alternative “best interest” standard to the Department of Labor’s proposed fiduciary rule. The bill defines investment advice to be individualized to the plan and would require that the consumer materially rely on the advice in making the investment or management decisions, recognizes that advisors may have a limited range of products that they are authorized to sell, requires full and fair disclosures, and allows for variable compensation. The press release on H.R. 3922 issued by Rep. Kelly and Chairman Johnson can be found here. The bill has been referred to two House committees: The Committee on Education and the Workforce and the Committee on Ways and Means.

In addition to H.R. 3922, Rep. Kelly and Chairman Johnson co-authored a joint letter to Labor Secretary Thomas Perez on October 6th, in which they expressed their concern that the proposed fiduciary rule would “severely disrupt the availability of affordable financial education and investment advice while also restricting product choice and retirement security for many American families.” The letter was co-signed by 103 members of the U.S. House of Representatives.


On November 5, 2015, a bipartisan group of House members issued a press release, expressing their concern that the proposed DOL fiduciary rule would have the negative consequence of harming individuals and families saving for retirement (particularly low- and middle-class families) and outlining a set of legislative principles that will help strengthen the retirement security of working families and ensure retirement advisors protects their clients’ best interests.

According to the press release, Representatives Peter Roskam (R-IL), Richard Neal (D-MA), Phil Roe (R-TN), and Michelle Lujan Grisham (D-NM) are working together to introduce a bipartisan legislative solution that reflects the following principles:

  • Promoting families and individuals saving for a financially-secure retirement is an essential public policy good.
  • Retirement advisors must serve in their clients’ best interests and must be required to do so.
  • Retirement advisors must deliver clear, simple, and relevant disclosure of material conflicts, including compensation received and all investment fees to individuals saving for retirement.
  • Public policies must protect access to investment advice and education for low- and middle-income workers and retirees.
  • Public policies should never deny individuals the financial information they need to make informed decisions.
  • Investor choice and consumer access to all investment services–such as proprietary products, commission-based sales, and guaranteed lifetime income–should be preserved in a way that does not pick winners and losers.
  • Small business owners should have access to the financial advice and products they need to establish and maintain retirement plans and help workers save for retirement.

These congressional developments are in addition to the bill introduced on February 25, 2015 by Representative Ann Wagner (R-MO), H.R. 1090.  H.R. 1090, the Retail Investor Protection Act, which has 34 co-sponsors and which passed the House of Representatives on October 28, 2015, would:

  • Prohibit the Secretary of Labor from prescribing any regulation under the Employee Retirement Income Security Act of 1974 (ERISA) defining the circumstances under which an individual is considered a fiduciary until 60 days after the Securities and Exchange Commission (SEC) issues a final rule governing standards of conduct for brokers and dealers under specified law.
  • Amend the Securities Exchange Act of 1934 to prohibit the SEC from promulgating a rule establishing an investment advisor standard of conduct as the standard of conduct of brokers and dealers before it reports to certain congressional committees whether:
    • Retail investors and other customers are being harmed due to brokers or dealers operating under different standards of conduct than those applicable to investment advisors under the Investment Advisers Act of 1940;
    • Alternative remedies will reduce any confusion or harm to retail investors due to brokers or dealers operating under such different standards of conduct;
    • Adoption of a uniform fiduciary standard of conduct for brokers or dealers and investment advisors would adversely impact their commissions and the availability of proprietary products offered by brokers and dealers, as well as the ability of brokers and dealers to engage in principal transactions with customers; and
    • Adoption of a uniform fiduciary standard of conduct for brokers or dealers and investment advisors would adversely impact retail investor access to personalized, cost-effective investment advice and recommendations.
  • Require the SEC: (1) to publish in the Federal Register formal findings that such rule would reduce retail customer confusion or harm due to standards of conduct applicable to brokers, dealers, and investment advisors; and, (2) in proposing rules, to consider the differences in the registration, supervision, and examination requirements applicable to brokers, dealers, and investment advisors.

NAFA is closely monitoring activities on The Hill for developments.

NAFA, the National Association for Fixed Annuities, is a national trade association exclusively dedicated to promoting the awareness and understanding of fixed annuities. NAFA is the only association whose sole purpose is advocating for the fixed annuity product.

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