Bernie Sanders Applauds DOL Fiduciary Rule

Sen. Bernie Sanders, I-Vt. is applauding the Labor Department’s new fiduciary rule proposal, stating that it ”levels the playing field for consumers by applying a uniform advice standard to retirement investments,” and “closes loopholes around rollover recommendations and advice to employers sponsoring 401(k) plans.”

The plan, Sanders, chairman of the Senate Health, Education, Labor and Pensions Committee, told Labor in a Jan. 2 comment letter, “prohibits unscrupulous financial professionals from steering retirement savers into expensive or poorly performing products that provide an incentive for the advisor — even if it is not the best choice for the client.”

In basic parlance, Sanders wrote, “this is known as providing ‘conflicted advice’ and it is significantly harming America’s retirement savers.”

Labor’s authority to write a fiduciary rule “is also clear in ERISA’s statute,” Sanders along with Rep. Bobby Scott, D-Va., ranking member on the House Committee on Education and the Workforce, wrote in the comment letter. “In crafting the Proposed Rule as it did, the Department remained faithful to both the intent of and authority authorized by ERISA,” the lawmakers wrote.

Both committees oversee the Labor Department.

The plan ”will apply a fiduciary standard to recommendations to rollovers from a workplace retirement plan to an IRA, if certain reasonable criteria are met,” the lawmakers wrote.

“Consumers are often vulnerable to high fees, inappropriate investment options, and conflicted advice when rolling over their savings out of a DC plan and into an IRA. Savers need fiduciary advice at the point of rollover perhaps more than any other time in their career, even if that decision is made over the course of a single conversation with a financial professional.”

Since the Securities and Exchange Commission began implementing Regulation Best Interest, “there is evidence to suggest that investment professionals are more than capable of offering advice in clients’ best interest and remaining profitable,” Sanders and Scott wrote.

“Additionally, there appears to be no evidence showing that people of color or moderate-income savers lost access to financial advice in the wake of the SEC’s Regulation Best Interest; and we fully expect the same to be true” with regard to the implementation of the DOL’s proposed rule.

While roughly 40 states have adopted the National Association of Insurance Commissioners’ (NAIC) model regulation establishing conduct standards for insurance agents and companies, the model rule fails “to provide a uniform, nationwide consumer protection standard as was intended under ERISA,” and it “does not require insurance agents and companies to give advice in retirement savers’ best interest and allows the continued use of non-cash compensation to incentivize the sale of expensive and underperforming profits,” the lawmakers wrote.

Instead, the model regulation “is a repackaged suitability standard, which we believe is wholly insufficient to protect consumers.”