The Honorable Ann Wagner
U.S. House of Representatives
435 Cannon House Office Building
Washington, DC, 20515
Dear Congresswoman Wagner,
On behalf of National Taxpayers Union (NTU), I write to endorse H.R. 3857, the “Protecting Advice for Small Savers (PASS) Act of 2017.” Your legislation repeals the Department of Labor (DOL) fiduciary rule and replaces it with a best-interest standard to ensure investors from all income brackets have the opportunity to access affordable and quality investment advice.
Data indicate the fiduciary rule has impacted more than 13 million total accounts, which have lost or now have limited access to financial products and services. Six million of those accounts are facing the prospect of reduced advice or higher fees, which consumers are estimated to face an addition $46.6 billion in costs, or $813 annually per account. Many firms have noted this rule will simply shift their business model from a commission-based system to a fee-based system, a scheme many consumers view less favorably. Ultimately, this rule harms those it was supposed to protect. As firms choose to deal only with big money money investors, lower and middle-income people could be priced out of the market.
In addition to repealing the fiduciary rule, your legislation would create a standard of conduct for brokers and dealers to ensure they are working in the best interest of their customers. It would require brokers to make recommendations that “reflect reasonable diligence, care, skill and prudence” and provide protections to the consumer by requiring brokers to disclose any material conflict of interest.
The fiduciary rule is a perfect example of well-intended policy that can have costly real-world consequences. It is important that all consumers receive investment guidance that is in their best interest, but the rule in its current form harms those it is designed to protect and must be replaced with a more efficient solution. NTU is pleased to endorse the “Protecting Advice for Small Savers Act” and urges all Representatives to cosponsor this legislation.
Policy and Government Affairs Associate