Without a single Committee Democrat voicing support, the House Education and the Workforce Committee reported out two bills earlier today that purport to require all financial professionals to act in the best interests of their customers when providing retirement investment advice. Clearly, Committee Democrats saw through the pretense and recognized that these bills would codify loopholes in existing rules and weaken the standards that apply.
The question is whether Ways and Means Committee members will be as clear sighted when they meet tomorrow to mark up H.R. 4294, Rep. Peter Roskam's cleverly misnamed "Strengthening Access to Valuable Education and Retirement Support Act" (SAVERS Act).
After all, anyone who takes the time to read H.R. 4293, Rep. Phil Roe's "Affordable Retirement Advice Protection Act," will quickly discover that it doesn't contain the "best interest" standard that even its lead sponsor acknowledges should apply to all investment advice. It requires a little more work to discern the false promise in Rep. Roskam's bill.
Unlike the Roe bill, the Roskam bill at least gives lip service to a best interest standard, albeit greatly watered down. But loopholes in the definition of investment advice ensure that even this watered-down standard would rarely if ever apply. And, in those rare instances when the bill's best interest standard would technically apply, retirement savers would have no means of holding advisers accountable for meeting that standard.
Perhaps the loopholes that both bills contain explain the support of industry groups, like SIFMA, that have argued elsewhere that consistent standards across all accounts are essential. After all, financial professionals will never have to struggle to figure out which of the conflicting standards in these bills would apply to a rollover recommendation, for example, if they can continue to disclaim away their fiduciary obligations with a few vague disclosures.
Working families and retirees saving to fund a secure and independent retirement deserve better. They deserve the strong and comprehensive protections provided by the Department of Labor conflict of interest rule. Fortunately, that rule continues to move closer to finalization, despite the millions financial industry lobbyists are spending to maintain their ability to profit at their customers' expense.