Washington, DC
SPRINGFIELD ? Stressing that he wants to ensure Americans can easily receive financial advice for retirement, U.S. Rep. Richard Neal, D-Springfield, beat back suggestions Thursday that legislation he’s co-sponsored aims to protect companies like MassMutual.
The veteran lawmaker, who introduced the two measures with Illinois Republican Rep. Peter Roskam, Connecticut Democrat Rep. John Larson and Tennessee Republican Phil Roe in late-December, said they come in response to retirement investment advice reforms proposed by the U.S. Department of Labor.
The legislation, which the Democrat said would only be triggered by an onerous or “overly complicated” DOL rule, however, has come under fire from some as being an “industry wish list” and making things worse by keeping loopholes and lowering standards.
Neal’s interest in such bills has also received criticism, with the Boston Globe reporting that it “would protect MassMutual — which is the veteran lawmaker’s biggest source of campaign money — and other insurance and financial services companies from regulations proposed by the Obama administration.”
Neal’s career campaign supporters, the newspaper said, are heavy with insurance and financial services companies, including MassMutual which has contributed nearly $350,000 from its employees and political committees.
While the congressman acknowledged the role the retirement savings industry plays in his district and places like Hartford, Conn. where some constituents may commute for work, he argued that the proposal “is entirely consumer driven.”
“The idea this is just about MassMutual is ridiculous,” he said in an interview.
Stressing that he has worked on retirement-related issues throughout his political career, Neal took issue with the suggestion that he could have a questionable motive.
The congressman also questioned comparisons drawn between his measures and those discussed by the Obama administration, saying the final DOL rule language has not yet been proposed.
“When and if it’s published, there’s still a period of comment and this proposal already has drawn tens of thousands of comments from people across the country,” he said, adding that nearly 100 congressional lawmakers – including six from Massachusetts – have offered concerns on it.
Upon introducing the bills, sponsors said they reflect a set of bipartisan principles members put forth in response to the DOL regulatory proposal, which “many fear will reduce access to financial advice for low- and middle-income families.” The bills, they added, represent a compromise to protect consumers.
According to Neal, the principle behind the legislation he’s co-sponsored is: “How do we make sure that we have a rule that allows middle class people to gain access to financial advice without onerous restrictions.”
He added that there’s broad agreement that the client comes first, there should be transparency and that bad actors should be removed.
According to the Globe, while the congressman’s proposal contains some similarities to the Obama administration’s plan to curb investment industry practices, like forcing brokers to disclose certain commissions and keeping clients’ best interests at heart, it “lacks many of the strictest requirements for transactions between broker and client, such as a written contract between broker and client and a list of preapproved investments that brokers can discuss.”
It would also require the Republican-controlled Congress to approve the DOL regulations – something which the newspaper said is unlikely to happen.
Sponsors noted that under the legislation, if Congress fails to approve the agency’s regulatory proposal, a new fiduciary standard would take effect that, among many things: requires advisors to clearly communicate key information to ensure investors are well-informed; and ensures those saving for retirement have access to advice and investment options that meet their needs.
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