Now that the Department of Labor is scrapping a rule proposal that would have
allowed brokers affiliated with financial-services firms to provide advice to
401(k) participants, Congress will move forward with legislation that would
require that such advice be given by independent advisers, according to a key
congressman.
The rule proposal was one of several Labor regulations put forth by the Bush
administration during its final days.
Labor Secretary Hilda Solis “will work with Congress to find ways to further
develop the existing market of qualified independent advice,” said Rep. Robert
Andrews, (D-New Jersey), chairman of the House Education and Labor Committee's
Health, Employment, Labor and Pensions Subcommittee.
His recent comments came after Assistant Labor Secretary Phyllis Borzi, head
of the Employee Benefits Security Administration, told a conference of 401(k)
administrators that new regulations will be issued for investment advice to
participants in the $2.3 trillion 401(k) market.
She gave no timetable for issuing a new proposal.
In July, the House Education and Labor Committee approved the 401(k) Fair
Disclosure and Pension Security Act of 2009.
The bill, which was sponsored by Andrews and committee chairman George
Miller, D-California, prohibits advisers affiliated with financial-services
firms from offering advice if their compensation rises and falls with specific
product recommendations.
The Pension Protection Act of 2006 would have to be changed for the DOL to
issue the kind of investment advice rules Congress would support, Andrews
indicated.
“It will take statutory and regulatory change to create the goal of
qualified-independent-investment advice affordable to every investor,” he
said.
Filed by Sara Hansard of
Investment
News, a sister publication of Workforce
Management. To comment, e-mail editors@workforce.com.
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