RETAIL INVESTOR PROTECTION ACT

October 27, 2015
Floor Statements

Mr. SCOTT of Virginia. Mr. Speaker, I rise in opposition to H.R. 1090, the so-called Retail Investor Protection Act.

   This bill puts an effective end to the Department of Labor's responsible effort to modernize a fiduciary standard under the Employee Retirement Income Security Act, or ERISA, that was implemented 40 years ago.

   As we all know, our country's retirement savings landscape has changed significantly since that time. Forty years ago, the majority of retirement assets were held in defined benefit plans and managed by professionals. Forty years ago, employer-based 401(k) plans did not exist and IRAs had just been established.

   Today, Americans have more than $12 trillion invested in 401(k) plans and IRAs, and they have to make their own financial decisions. Many workers and their families don't have the expertise in managing investment portfolios and so they often have to rely on financial advisers to help them save for retirement.

   While many of those advisers do right by their clients, others do not. There is a lot of different financial products that Americans can purchase. Some have extremely high fees, while comparable products--and perhaps even better ones--have lower fees. This current standard allows for unscrupulous advisers to give conflicted advice and push a financial product from which they will reap a bigger profit even if the product is not in the best interest of their client.

   It is individuals with modest retirement savings--many of our constituents--who stand to lose the most from receiving conflicted advice. National Public Radio recently conducted a series that in part highlighted how Americans are losing billions of dollars every year out of their retirement accounts because they are paying excessive fees.

   As a hypothetical example, NPR cited a person who invests $10,000 and that investment makes a 7 percent return every year. Over 40 years, that investment would be worth almost $150,000. But if you have invested in a

   fund that charges a 2-percent annual fee, now you have cut the return down from 7 percent down to 5 percent. Over 40 years, your investment would be worth about $70,000, not almost $150,000. That is, obviously, a big difference, and that is the kind of insidious erosion of retirement savings that the Department is working to end with their rule.

   Since April, the Department of Labor has been engaged in this necessary rulemaking process. The Department has informed us that over that time, it provided the American public a total of 164 days to submit comments; they conducted 4 full days of public hearings; and convened over 100 meetings. That total doesn't account for meetings they have held with Members of Congress.

   Now the Department is completing its work on the rule and is taking into account the thousands of comments it received. Here in Congress, we should just let them finish their job.

   Millions of Americans rely on financial advisers for advice on how to protect their hard-earned retirement savings, and it is about time that we ensure that those Americans are provided advice consistent with their best interest, not with what would ultimately be in the best interest and profit for the adviser.

   I, therefore, urge my colleagues to defeat this legislation.