A leading opponent of a Department of Labor proposal to raise investment-advice standards for brokers working with retirement accounts is pursuing an aggressive strategy — that includes denying the agency funds to implement it — to stop the rule.
“We are at war with the Department of Labor,” Rep. Ann Wagner, R-Mo., told the audience at a National Association of Insurance and Financial Advisors event Tuesday in Arlington, Va. “I need you to be tough.”
Ms. Wagner was firing up NAIFA members before approximately 800 of them set out Wednesday to visit with lawmakers and their staff on Capitol Hill. The priority for those meetings is to persuade members of Congress to oppose the DOL rule, which would require brokers to act in the best interests of their clients when advising on 401(k) and individual retirement accounts.
Like NAIFA and other industry opponents, Ms. Wagner argues that the rule would significantly raise regulatory and liability costs for brokers and price them out of serving the middle-income market of retirement savers.
The proposal was released in April with the strong backing of President Barack Obama, who asserts that the rule will protect workers and retirees from conflicted investment advice that puts high-fee products in their portfolios that eat away at their nest eggs.
COMMENT PERIOD EXTENDED
Last week, the DOL added 15 days to the initial comment period, under pressure from the financial industry and bipartisan members of Congress.
Although the presidential imprimatur has given the rule momentum, Ms. Wagner told NAIFA members there is a three-pronged effort to halt it.
One approach is to build grass-roots opposition. Another is to pass a bill Ms. Wagner has written that would force the DOL to halt its effort until the Securities and Exchange Commission decides whether to pursue its own fiduciary rule for retail investment advice.
A third element would be to target DOL during the congressional appropriations process later in the year.
“If push comes to shove … by god, we'll just defund them,” Ms. Wagner said to cheers from NAIFA members.
Before that stage, Ms. Wagner said she hopes opposition to the rule will force Mr. Obama to back down. She hopes that his reversal on curbing the tax advantages of 529 college savings earlier this year can be repeated.
“We sure watched the president do an about face on the 529s when the people spoke,” she said in an interview after her appearance at the NAIFA event.
DEMS 'NOT READY TO BE OUTED'
Her bill likely will get a hearing in the House Financial Services Committee in June, said Ms. Wagner, who is a member of the panel. She said she has Democratic co-sponsors, who have not yet been announced.
“They're not ready to be outed,” she said.
Opponents of the bill say it is designed to kill the DOL rule because the SEC may never decide to move ahead with its own fiduciary rule.
A version of the measure was approved by the House in October 2013, and Mr. Obama threatened a veto. It's unclear when the current bill would get a House vote or what its prospects are in the Senate.
Ms. Wagner said she has spoken to Senate Banking Committee Chairman Richard Shelby, R-Ala., about the fiduciary rule, but not about her bill.
“I do believe we have support over in the Senate,” she said.
In her NAIFA speech, Ms. Wagner said brokers and insurance salespeople had been unfairly portrayed by proponents of the DOL fiduciary rule, including Mr. Obama and Sen. Elizabeth Warren, D-Mass.
“You all, despite what this administration and Sen. Elizabeth Warren think, are not snake-oil salesmen,” Ms. Wagner said. “It's amazing how you all have been villainized. You all are family to the customers you serve.”