Rep. Rob Andrews, D-New Jersey, said Tuesday, March 24, that any pension reform legislation considered by the House Education and Labor Committee will include new guidelines for offering investment advice to defined-contribution plan participants.
A controversial investment advice regulation by Department of Labor issued the last day of the Bush administration on January 20 has been put on hold by the DOL because of concerns that it would clear the way for investment advisors to steer participant investments to their own funds.
“My own view is that independent investment advice—qualified independent investment advice—is the way to go,” Andrews, chairman of the House Health, Employment, Labor and Pensions Subcommittee, said during a hearing Tuesday, March 24.
“I’m certain that any legislation that the full [House Education and Labor] committee takes up will touch on this area,” Andrews said.
Concurring with Andrews’ assessment of the Bush administration’s investment advice rule during the subcommittee hearing was Mercer Bullard, an associate professor at the University of Mississippi Law School and president and founder of the advocacy group Fund Democracy Inc.
“The [Bush administration rule] will have the effect of suppressing the providing of independent advice to participants while encouraging participants to rely on advisors whose incentives are to maximize their own compensation at the expense of participants,” said Bullard in the text of his testimony.
But Melanie Nussdorf, a partner with the law firm Steptoe & Johnson, who was testifying on behalf of the Securities Industry and Financial Markets Association, said the Bush administration advice rules, if allowed to go into effect, would clear the way for participants to get access to “advice providers who offer advice on a wide variety of investments—in person or on the phone—in a cost-effective manner.”
“Current advice programs do not reach enough workers in ways that are comfortable for those workers to make professional advice the norm rather than the exception,” Nussdorf said.