Disapproving A Rule Submitted By the Department of Labor

Floor Speech

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Mr. WYDEN. Madam President, last month the Department of Labor laid out new safeguards that will help middle-class savers in a rule pertaining to advice given by financial advisers. Today the Senate has taken up a resolution of disapproval that will undo that progress. I urge my colleagues to oppose it. The Senate ought to be doing everything it can to help middle-class workers save for retirement. Instead, this resolution would go in the opposite direction.

Workers from Oregon and across the Nation are facing a savings crisis. Fewer and fewer people have access to the type of simple, reliable pensions that were once commonplace. The ``Leave it to Beaver'' ideal of getting a family-wage job, working your way up in a company, and retiring with a pension and a gold watch is not the prospect in front of many American workers today.

For most Americans, the road to retirement now takes many more twists and turns. The burden of figuring out how to save, which seems to get tougher all the time, often falls directly on the workers themselves. First come the tough questions, and they come right up front: when to start saving, how much to set aside, when to retire, and how much to draw down each month. What happens if you outlive your savings? You have to study the markets, stocks and bonds, mutual funds, exchange- traded funds, index funds. You have to decide what kind of risks you can afford to take on. It is even complicated for employers who have to pick from a long list of different kinds of retirement plans: 401(k)s, SIMPLE IRAs, SEPs, employee stock ownership plans, stock bonus plans-- to name just a few.

It should come as no surprise to anybody that Americans frequently turn to financial planners to help figure out these issues. It is my view that the overwhelming majority of these advisers are honest individuals who act in the best interest of their clients, but without modern protections in place, some bad actors, unfortunately, choose to push their clients toward products with higher fees and lower returns. It could mean the loss of tens of thousands of dollars from a retirement account over a lifetime of savings.

To be clear, this is not some kind of esoteric issue that hardly anybody faces. It is a very substantial drain on middle-class savings. One estimate by the Council of Economic Advisers said that conflicts of interest in retirement advice cost Americans $17 billion every single year. That is where the Labor Department's new rule comes in. The rules pertaining to fiduciary investment advisers who act solely in the interest of their clients date back to 1975. Obviously, in the more than 40 years since then, there have been very large changes in the retirement world. Many more 401(k)s, fewer professionally managed pension funds, and many more individuals and employers--especially small employers--lean on advisers for help determining how to invest their funds.

It seems to me the law ought to be modernized to reflect those changes. The new rule seeks to lay out modern safeguards that are going to help protect middle-class savers and small business owners. What it says is that going forward, all retirement savers will be able to get advice that is in their best interest. It is a simple principle. My hope is, policymakers on both sides of the aisle will give it strong support.

It is important to recognize that the Labor Department made a number of changes based on legitimate concerns that were raised as this rule came together. For example, last summer I wrote a letter to Secretary Perez with a number of my colleagues from the Senate Finance Committee that flagged a number of issues, asking the Secretary to ensure that any final rule would work effectively. As I said--a group of us Democratic members on the Senate Finance Committee--there were a number of issues that we thought needed a bit more work.

I am pleased to see that the Secretary took many of our suggestions. For example, our Senate Finance Committee letter highlighted the importance of a smooth transition to the new rule, and the Secretary actually took steps that included an extended implementation period. Instead of finding fresh approaches to help Americans prepare for retirement, colleagues on the other side have brought forward a resolution of disapproval under the Congressional Review Act that would, in effect, block these new protections. In the 20 years since it became law, there has only been one successful disapproval resolution under the Congressional Review Act. Under no circumstances should this extreme tool be used to make it harder for middle-class Americans to get sound retirement advice.

We have a situation where the rules of the road date back for more than 40 years. The bottom line is that we ought to come together and update those rules so we can protect our small businesses, the middle class, and build a stronger ethic of saving in America. That is what this is all about.

I strongly urge my colleagues to oppose the resolution of disapproval.

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