Compliance

Miller Slams DoL Advice Proposal

By Nevin E. Adams | August 21, 2008

August 21, 2008 (PLANSPONSOR.com) - The Labor Department's advice proposal drew a quick - and harsh - assessment from Congressman George Miller (D-California).

"For far too long, the rules of the financial services industry have been tilted in the interests of companies and consultants, not the millions of American workers who are deeply worried about saving enough for a secure retirement," Miller said in a statement.   Miller, the chairman of the House Education and Labor Committee, said that the two rules proposed by the U.S. Department of Labor could further undermine retirement savings plans that millions of American workers depend on.

The components of the proposals clarify the Pension Protection Act (PPA) exemption for investment advice, according to the Department of Labor (DoL) (see  EBSA Clarifies Investment Advice Regulations ).   The PPA had added an exemption that allowed participants of 401(k) plans and IRAs to receive investment advice by using an unbiased computer model or an adviser compensated on a "level-fee" basis (see  An Advice Road Map ).   After receiving comments since December 2006 about clarifying computer models and developing the model for the disclosure of adviser fees, the DoL issued the new proposals.   Bradford P. Campbell, assistant secretary of labor for Employee Benefits Security Administration at the DoL, said the proposals were part of the continued efforts to protect participants from receiving investment advice from individuals with a vested interest in products.

Scales Tipped?

That wasn't how Miller saw it, however.   "For far too long, the rules of the financial services industry have been tilted in the interests of companies and consultants, not the millions of American workers who are deeply worried about saving enough for a secure retirement. Now, the Bush administration is proposing to further tip the scales towards special interests by opening the door to conflicts of interest among the very consultants purporting to offer unbiased investment advice, and potentially allowing companies to reap windfall profits at the expense of America's workers," he said in a  statement .

House Republican Leader John Boehner (R-Ohio), a long-time proponent of the type of advice legislation that was finally incorporated in the PPA, saw it quite differently, praising the Department of Labor (DOL) for taking a "major step in implementing key investment advice reforms to help American workers make the most of their retirement future.   "The Pension Protection Act included key reforms to give workers access to high-quality, professional investment advice to help them manage their retirement savings more wisely," Boehner said in a  statement .   "Today's action by the Department of Labor is a major step toward giving workers just that."  

Miller didn't just express his dissatisfaction with the proposal, he said they were "nothing less than a boon for Wall Street and corporate executives," and urged the DoL to "immediately withdraw these harmful proposals."  

In a statement he added, ""In its final months in office, this administration has developed a disgraceful pattern of sneaking in last-minute regulatory changes at the behest of special interests. At a time when Americans' retirement accounts have already been pummeled by the nation's economic downturn, it is deeply extremely troubling that the department is trying to push through proposals that would further jeopardize workers' hard-earned savings."