Most Democrats support DOL advice proposal in House hearing

investmentnews.com:

Most Democrats at a House hearing Wednesday expressed support for a Department of Labor investment advice rule proposal that has come under fierce attack from Republicans and financial industry opponents.

The proposed regulation – the retirement security rule – would expand the definition of fiduciary under federal retirement law and impose that standard on most financial advisors and insurance professionals who make recommendations to company retirement plans and plan participants and to investors in individual retirement accounts.   

The measure, which was introduced in October and generated 19,000 comment letters, has drawn strong praise and criticism – both of which were expressed at the hearing of the House Financial Services Subcommittee on Capital Markets.   

Earlier this week, 50 lawmakers, including five Democrats, sent a letter to the DOL demanding that the agency withdraw the proposal. Echoing industry arguments, they asserted the measure would significantly increase regulatory costs for financial firms and boost the price of advice, making it unaffordable for low- and middle-income workers.

The top Democrat on the subcommittee was much more sympathetic toward the rule, which the Biden administration has promoted as a way to combat “junk fees” that arise from financial advisors’ conflicts of interest.

“The regulation before us has those who hate it [and] those who love it,” said Rep. Brad Sherman, D-Calif. and ranking member of the subcommittee. “Put me in between. The fact is that we need to improve this regulation. But, I think, ultimately, we need a regulation in this space.”

Sherman said the regulation would be better if it codified that certain conversations between advisors and investors – such as ones