Today, several Democrats raised concerns over the Department ofLabor’s proposed fiduciary rule at a hearingheld by two subcommittees of the House Financial ServicesCommittee.

“I can’t believe we are still talking about this issue,” saidRep. John Carney, D-Delaware, who expressed concern that the rulecould unintentionally restrict access to financial advice for low-and middle-income Americans.

Carney, who said the complexity of the issue was “beyond me”when he first set out to understand it in 2010, when the DOL firstattempted to write a new fiduciary standard, also said the timeto create a new rule is now.

“I don’t think we should kick the can down the road anymore,”said Carney.

That statement leaves in question whether he would support theRetail Investor Protection Act, a new iteration of a law firstintroduced in 2013 and sponsored by Rep. Ann Wagner,R- Missouri, which would require the Securities Exchange Commissionto be the lead regulator in writing a new fiduciary rule.

Such a requirement would certainly slow the process ofimplementing a new fiduciary standard.

Opponents of the DOL’s rule argue a new best-interest standardis best left to the SEC, which has both the jurisdictionalauthority and expertise to write a new rule.

But the SEC is years away from finalizing a rule, as the agencyhas been slow, if not reluctant, to initiate the rulemakingprocess.

Such stasis means the DOL is right to act, argue proponents ofits rule.

No Democrat in the hearing was as insistent in their oppositionto the rule as Rep. David Scott, D-Georgia.

“The rule puts financial advisors in a straight jacket,” saidScott, who believes the proposal’s Best Interest ContractExemption, a new fee-disclosure requirement that investors wouldhave to sign, could “frighten the very consumers” the rule istrying to help.

Scott said that the African-American community could beparticularly vulnerable to such an unintended consequence of therule. Scott, a member of the Congressional Black Caucus, expressedhis concerns for the rule in a letter to Labor Sec. Thomas Perezthat was co-authored by Rep. Wagner.

Rep. William Clay, D-Missouri, also a member of the FinancialServices Committee and Congressional Black Caucus, signed theletter to Perez as well.

Rep. Brad Sherman, D-California, said that he supported theRetail Investor Protection Act in 2013, but indirectly cautionedRep. Wagner that the bill’s new version, which he said would askthe SEC to move more slowly on a fiduciary rule, “could make itharder for us to support.”

Nevertheless, Sherman was extremely critical of the DOL’sproposal.

“The rule is written by economists that believe everyone in thecountry is an economist,” said Sherman, referring to predictionsthat small investors would end up having to go it alone or rely onrobo-advisor advice.

“People want to invest where they can talk to a person,” saidSherman, whose line of questioning to the hearing’s panelistssuggested a suspicion of robo advice.

Rep. Gregory Meeks, D-New York, insisted the DOL’s rule mustweigh the need for access to financial advice with the need toprotect the vulnerable.

“Most Americans are not financial experts,” noted Meeks. “It’s abalancing act. This DOL rule is far too important. Wemust strike the right balance.”

The hearing’s five panelists were heavily weighted against theDOL’s rule, with only one, Mercer Bullard, a securities attorneyand former assistant chief counsel at the SEC, in support of theproposal.

The Retail Investor Protection Act would only serve asinterference for a rule that is necessary to address conflicts ofinterests inherent in the advisor industry, implied Bullard.

Several times during the hearing, he used the example ofdifferences in compensation for short-term bond funds and equityfunds, and bonuses tied to quarterly and annual sales quotas asexamples of systemic incentives that encourage brokers to giveconflicted advice.

“I’d like to see what the DOL finally adopts” before passing alaw that would require the SEC take the lead in new rulemaking,said Bullard.

“The SEC for the last 15 years has exhibited a rule-makingparalysis,” he added. “This subcommittee knows better than anyonethat SEC seems incapable of producing a rule on this.”

He said the SEC is the “last agency on earth” that can beexpected to get a rule done.

One Republican, French Hill, R-Arkansas, who ran a broker-dealerand was a fiduciary of a trust company before being elected toCongress, said the inability to get a rule done has been “anembarrassment to our country.”

Other Republicans voiced repeated concerns for the proposal’saffect on small investors and their incredulity forrobo-advisors.

Republicans also made several references to the so-called“advice gap” that has been experienced in the United Kingdom, astens of thousands of small investors have reportedly lost access toadvice in the wake of that country’s ban on commissions.

Panelists from the Investment Company Institute, NAIFA, theAssociation for Advanced Life Underwriting, and Raymond Jamestestified as to how the rule would restrict choice and innovationin the advisor marketplace, among the numerous other problems theycollectively share with the proposal.

Panelist Caleb Callahan, representing the AALU and the chiefmarketing officer at ValMark Securities, an Ohio-basedbroker-dealer, said the proposal’s impact on small investors wouldbe real and far-reaching.

He said his firm was already creating contingencies that wouldrequire minimum assets of $150,000 for IRA accounts if the proposalis finalized.

“That’s not speculation,” said Callahan. “That’s fact.”