Don’t ever think the Republicans controlling the House of Representatives don’t know their priorities. Even as Democrats staged a historic sit-in on the House floor beginning Wednesday, singing “We Shall Overcome” and reading names of people who died as a result of gun violence in an attempt to force a vote on gun-control legislation, GOP representatives made sure to let the financial services industry know they cared.
Yes, I’m back to writing about the fiduciary standard. That’s the Obama administration regulation that is scheduled to go fully into effect in 2018 and will require financial advisers giving retirement advice to put their clients’ best interests ahead of their own, something many are not currently required to do.
The House was scheduled to vote on a bill Wednesday afternoon that would have blocked the new regs from taking effect. Instead, the vote occurred in the late evening, as Democrats chanted “No Bill, No Break”—referring to the Republican’s refusal to allow a vote on proposed gun regulations—as the roll call was tallied.
As a tweet from the Americans for Financial Reform put it:
The House reconvenes to defend billions in Wall Street profits earned by putting its interests over their clients. https://t.co/AGKS4NpC6w— AFR (@RealBankReform) June 23, 2016
The bill, which has already passed once and been vetoed by President Obama, failed to garner the two-thirds majority it needed.
As I’ve written numerous times in the past, while most of us think anyone we seek out for investment advice needs to adhere to some sort of financial equivalent of the Hippocratic oath, that’s not true. Many financial advisers are held to a lower standard, something called the suitability standard. According to the Obama administration, this enriches the financial services industry at the expense of retirement savers by about $17 billion annually.
So all’s well that ends well for the United States’ retirement savers? Sigh. Not really. In the past few weeks, a number of industry groups opposed to following rules that will require them to act in the best interests of their customers have filed five separate lawsuits in an effort to stop the federal government from implementing this basic, common-sense protection for investors. They include the U.S. Chamber of Commerce, the Securities Industry and Financial Markets Association, and the American Council of Life Insurers.
These lawsuits will, no doubt, play out over the next few years. In the meantime, I leave you to ponder the fact that a majority of members of the House of Representatives appear to be more concerned about preserving the rights of financial schlock salesmen and saleswomen to continue making a mint by giving Americans less than ideal investment advice than they are about the deaths of thousands of Americans annually due to gun violence.