Business

McCaskill, Democrats slam Obama’s financial adviser regs

by Kevin Cirilli - 08/06/15 5:09 PM ET

Moderate Democrats slammed President Obama’s proposal to regulate financial advisers, arguing that the administration’s proposed regulations would decrease low- and middle-income Americans’ access to financial advice.

The administration is battling the business community to implement new disclosure requirement for financial advisers.

{mosads}Obama and Labor Secretary Thomas Perez argue that the requirements are needed because some financial advisers sell faulty investment advice to consumers so that they can pocket payments from financial institutions off the sale.

But in a letter to Perez on Wednesday, Sen. Claire McCaskill (D-Mo.) wrote that “there are still risks in this proposal.”

“More individuals may completely lose access to in-person investment advice,” McCaskill wrote in the letter, an argument that Republicans have made for months.

McCaskill Letter DOL Fiduciary Rule 08052015

“At a time when policy-makers and regulators should be preserving, protecting and enhancing retirement savings policy, the proposed rule reverses what has been a recent trend to increase coverage, reduce leakage and enhances savings vehicles.”

“The stakes are too high to risk the loss of advice for a such a critical segment of the retirement marketplace,” she wrote in the letter, first obtained by The Hill.

Meanwhile, Democratic Sens. Jon Tester (Mont.), Heidi Heitkamp (N.D.) and Joe Donnelly (Ind.) sent a letter of their own to Perez on Thursday.

“We encourage you to ensure that rules related to retirement savings do not work at cross-purposes in a way that could limit investor access to education and increase costs for middle-class Americans,” the senators wrote, according to the letter, also first obtained by The Hill.

They urged Perez to adopt a “business model neutral” model that wouldn’t negatively impact the market place.

“Fundamentally altering the current business model, which we believe the rule would do in its proposed form by effectively requiring level fees — whether intentional or unintentional — could limit access to retirement advice and may push investors out of many options that they can afford,” according to the letter, which was also signed by Sen. Angus King (I-Maine).

150806 Letter to Sec Perez Re Fiduciary Rule

Labor officials are set to have a hearing on the proposal next week. The administration, backed by Sen. Elizabeth Warren (D-Mass.) and a broad coalition of liberal groups, have rallied behind the administration.

But the break in Democrats could signal that Congress could indefinitely delay the regulation, which failed to gain traction in 2010, as part of the congressional budget votes this fall.

Tags Angus King Claire McCaskill Elizabeth Warren Heidi Heitkamp Joe Donnelly Jon Tester Thomas Perez