Financial advisers push back on proposed new rules

The business community on Friday fired back at administration officials who it says are pushing excessive regulations for financial advisers.

At a forum at the Chamber of Commerce headquarters in Washington on Friday, industry members said the new regulations are unnecessary, too costly and ineffective at helping Americans gain unbiased access to advice for their 401(k)s and retirement accounts.

They questioned Department of Labor officials’ coordination efforts with other government agencies, lawmakers and businesses nationwide in seeking to understand the financial advice payment system.

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"Our concern is the lack of real transparency," said panelist Judy Miller, director of retirement policy at the American Society of Pension Professionals & Actuaries.

Miller said that the industry feels "like absolutely nobody has heard [our] concerns or cares to address them."

"It pushes you to a negative position," Miller said. "Nothing good happens in that environment, and I'm afraid that's what's been going on here."

Labor officials are expected to move ahead any day with plans for new regulations that would create new disclosure requirements for financial advisers and investment dealers. 

Administration officials — emboldened by support from AARP and the AFL-CIO — say the rules are needed to better protect Americans against financial advisers who pocket commissions from the financial advice they offer to unsuspecting Americans. They argue that there's a conflict of interest for a financial adviser to sell advice — suggesting a client make a particular investment, for example — if they will earn money off the sale.

The issue has already garnered interest on Capitol Hill, reigniting political tensions that emerged in 2010, when Labor officials first pushed for the new regulations — without success on that occasion.

Edwin Egee, manager of government affairs for Xerox Corp., said that Sen. Charles SchumerChuck SchumerVoting rights failed in the Senate — where do we go from here? Forced deadline spurs drastic tactic in Congress Democrats call on Biden administration to ease entry to US for at-risk Afghans MORE (D-N.Y.) will be a lawmaker to watch, as Congress ramps up its pressure on Labor Department officials.

"The guy to watch here to me is Schumer," Egee, a former staffer to Sen. Johnny Isakson (R-Ga.), said on a panel. "This is the guy that represents Wall Street, but by the same token, is very wary of the emerging Elizabeth Warren wing of the party." 

Egee said that he'll also be watching to see if centrist Democrats in the House support efforts championed by Republicans. Rep. Ann WagnerAnn Louise WagnerHouse GOP members introduce legislation targeting Russia over Ukraine Consumer bureau chief bashes FTC and pledges focus on tech giants, big firms House Democrats scramble to save housing as Biden eyes cuts MORE (R-Mo.) is planning to reintroduce legislation that would delay Labor Department officials from implementing the rules.

Miller said, "This sometimes gets set up as Wall Street versus the poor."

"That has nothing to do with it," she said. "We're talking about interactions between a small business and another business. The reputational risk for not being known as a good player is huge in this environment. Reputation is everything."

Norman Stein, a Drexel University law professor, defended the administration's proposals. He said that "good people in conflict of interests sometimes do bad things."

"What we're hoping for from the regulations is a regulation that is tough and looks at conflicts and says that conflicts do influence people," Stein said. 

He said he didn't wish to demonize financial advisers but added, "it's not a profession that attracts Mother Teresas any more than law does."

The joke fell flat in the room of about 50 financial services industry experts.

The Chamber's meeting came one week after AARP hosted a strategy session at their headquarters in Washington discussing ways to support the administration's efforts on the issue.