By Andrew Taylor, Associated Press
WASHINGTON (AP) — Republicans controlling the Senate passed legislation Tuesday to block new Obama administration rules (pdf) that require financial professionals to put their client’s best interest first when giving advice on retirement investments like individual retirement accounts.
The Senate passed the legislation to roll back the rules by a mostly party-line 56-41 vote. The regulations are aimed at blocking financial advisers from steering clients toward investments with higher commissions and fees that can eat away at retirement savings.
The new regulations, commonly known as the “fiduciary rule,” require advisers who charge commissions to sign a promise that they will act in the client’s best interests, earn “reasonable” compensation and disclose information about fees and conflicts of interest. It will take effect next April.
“It’s pretty simple. It says if you’re giving people advice on their retirement accounts, you should put the clients’ best interests ahead of your own,” said Sen. Patty Murray, D-Wash. “We’re here today because Republicans want to block that new rule from helping families. That’s just wrong.”
Republicans say the rules would establish a new fee structure that might not be worth the broker’s trouble, and consumers won’t be able to get the advice they want. Instead, opponents say, retirees may have to seek higher-priced advice or fend for themselves. They point to the experience of Great Britain, which has imposed a similar rule.
“The result was that people with smaller savings accounts lost access to retirement advice,” said Sen. Lamar…