May 24,2016

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Wyden Offers Support for Fiduciary Rule in Senate Floor Statement

As Prepared for Delivery

WASHINGTON – Senate Finance Committee Ron Wyden, D-Ore., today called on his colleagues to oppose the pending resolution of disapproval that would block the Department of Labor’s recently announced fiduciary rule.

Wyden’s full remarks can be found below:

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 would undo that progress. I urge my colleagues to oppose it. The Senate ought to be doing everything it can to help middle class workers to save for retirement. Instead, this resolution would go in the opposite direction.

Workers from Oregon and across the country 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 – that’s not the prospect most American workers face today.

For most Americans, the road to retirement now takes a lot more twists and turns. And 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 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 kinds of risks you can afford to take on. It’s 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 for help figuring these issues out. And in my view, the overwhelming majority of these advisers are honest people who act in the best interest of their clients. But without modern protections in place, some bad actors choose to push clients toward products with higher fees and lower returns. It could mean a loss of tens of thousands of dollars from a retirement account over a lifetime of savings.

And to be clear, this isn’t some esoteric issue that hardly anybody faces. It is a serious drain on middle class savings. One estimate by the Council of Economic Advisors said that conflicts of interest in retirement advice cost Americans $17 billion every year.

That’s where the Labor Department’s new rule comes in. The rules pertaining to “fiduciary investment advisors,” who act solely in the interest of their clients, date back to 1975. And in more than 40 years since then, there have been big changes in the retirement world. Many more 401(k)s, fewer professionally-managed pension funds. And a lot more individuals and employers – especially small employers – lean on advisers for help determining how to invest their funds. Our laws need to reflect those changes.

So the new rule lays out modern safeguards that will help protect middle class savers and small business owners. What it says is that going forward, all retirement savers will get advice that’s in their best interest. It’s a simple principle that I believe policymakers on both sides of the aisle should support.

It’s 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 Senate Finance Committee Democratic colleagues flagging a number of issues and asking the Secretary to ensure that any final rule work effectively. I’m pleased to see that the Secretary took many of our suggestions. For example, our letter highlighted the importance of a smooth transition to the new rule, so the Secretary took steps that include an extended implementation period.

But now, instead of finding fresh approaches to help Americans prepare for retirement, my colleagues on the other side have brought forward a resolution of disapproval under the Congressional Review Act that would block these new protections. In 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.

The bottom line is that middle class savers and small business owners need help getting sound advice for retirement saving. The rules of the road date back more than 40 years, and they need updating to protect today’s middle class. That’s what this is all about. So I urge my colleagues to oppose the resolution of disapproval.