Congress is worried that any change to the definition of who is a fiduciary will limit the access minority groups have to investment advice.
In a letter to the Department of Labor this week, Congress encouraged acting Secretary Seth Harris to take into consideration the effects its proposed rule to amend the definition of “fiduciary” will have on minority communities.
“At a time when many Americans are struggling to ensure a secure retirement, we have concerns that the Department’s re-proposal could severely limit access to low cost investment advice. After years of hard work, often for long hours and at low wages, many of our constituents face the challenge of planning for their retirement without access to professional investment advice and services,” the members of Congress said in the letter dated June 14.
“We are concerned that a new, more restrictive definition of fiduciary would add yet another barrier to accessing qualified retirement planning services.”
An earlier, new definition was proposed that would have prohibited commission-based advisors from advising on IRAs and 401(k) plans because the Department of Labor sees commissions as generating a conflict of interest. After scrutiny, the rule was withdrawn and a new rule is expected this fall.
Congress also encouraged the DOL to adopt policies that expand access to advice, particularly in light of the racial and gender disparities that currently exist in retirement savings.
The re-proposed rule should enhance investor protection without reducing investor access to affordable retirement advice, products and services. The note also encouraged the DOL to work more closely with the Securities and Exchange Commission to avoid uncertainty and disruption in the marketplace.