House GOP seeks to block stricter rule on retirement savings

WASHINGTON (AP) — The GOP-controlled House has voted to overturn new Obama administration rules requiring stricter standards for brokers regarding retirement investments.

Thursday’s 234-183 vote to reject the rules was driven by Republicans who warn they will limit the options available to investors and could cause brokers to abandon retirement savers with smaller accounts.

The new rules require brokers to act as so-called fiduciaries that put their clients’ best interests first, rather than steering them toward investments with higher fees for the broker. At stake are about $4.5 trillion in 401(k) accounts and more than $7 trillion in IRAs. Problems often occur when people who are retiring “roll over” their 401(k)s into individual retirement accounts and are sold questionable products.

“Some financial advisers are recommending financial instruments that offer financial rewards to the adviser for steering clients to those instruments, instead of recommending retirement options that are in the best interest of the customer,” said Rep. Rosa DeLauro, D-Conn.

The White House has promised to defend the rules with a threat to veto Thursday’s measure.

Opponents of the rules counter the new fee structure might not be worth the broker’s trouble. Instead, opponents say, retirees may have to seek higher-priced advice.

“The last thing Washington should be doing is making it harder for working families to save and invest, but because they took their ‘my-way-or-the-highway’ approach, we now have a rule that will do exactly that,” said Rep. Phil Roe, R-Tenn. “This ‘fiduciary’ rule will make it harder for working families to save for retirement. It will restrict access to some of the most basic financial advice.”

Rep. Charles Boustany, R-La., said the rule will “make it so costly to use a retirement adviser, most low- and medium-income families will be locked out.”

Democrats countered that the previous rules allowed brokers to rip off investors by pushing them toward higher-cost investments like variable annuities or riskier options such as real estate investment trusts.