Lawmakers Push to Reverse Biden Administration’s Retirement Investment Advice Rule
A bipartisan group of lawmakers is taking steps to overturn a new rule implemented by the Biden administration that regulates who can provide retirement investment advice. The Department of Labor (DOL) announced the finalization of the “Retirement Security Rule: Definition of an Investment Advice Fiduciary” on April 23, updating the definition of a fiduciary under the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code. The rule aims to protect investors by requiring fiduciaries to adhere to high standards of care and loyalty and avoid making recommendations that prioritize their own interests over those of retirement savers.
While the Biden administration argues that the rule is necessary to safeguard investors, critics contend that it will restrict investment advisors and limit consumers’ options. In response, a bipartisan group of lawmakers has introduced a Senate joint resolution to reverse the rule. Sen. Bill Cassidy (R-La.) expressed concern about burdensome regulations imposed by the Biden administration, stating that Americans should be encouraged to save by minimizing hassle.
The resolution, utilizing a provision within the Congressional Review Act (CRA), disapproves of the new DOL rule and aims to render it ineffective. Sen. Joe Manchin (D-W.Va.), a co-sponsor of the bill, argues that the rule threatens various financial tools favored by consumers, including basic financial education, investment planning courses, life insurance, annuity plans, and other financial instruments. Rep. Virginia Foxx (R-N.C.) points out that the new rule is similar to one that was struck down by the 5th U.S. Circuit Court of Appeals in 2018.
The efforts to overturn the rule have gained support from several Republican lawmakers in both the Senate and House of Representatives. Rep. Rick Allen (R-Ga.) is sponsoring a companion version of the Senate bill in the House, with the backing of Rep. Foxx. However, it is worth noting that the DOL has not yet responded to requests for comment on the new rule and the efforts to reverse it.
On the other hand, some lawmakers, such as Sen. John Fetterman (D-Pa.), have praised the DOL for implementing the rule. Sen. Fetterman, along with other Democratic senators, penned a letter in March urging the department to proceed with the regulations. He commended the Biden administration for fighting for working families and cracking down on practices that harm consumers. The rule is seen as a step towards eliminating conflicts of interest and ensuring financial advisors prioritize their clients’ best interests.
In conclusion, the new Biden administration rule regulating retirement investment advice has sparked a bipartisan debate among lawmakers. While critics argue that it will limit investment options, supporters believe it is a necessary measure to protect investors. The resolution to reverse the rule highlights concerns about federal overreach and potential limitations on access to investment advice. The fate of the rule remains uncertain as lawmakers continue to push for its reversal.
