In the following op-ed, originally published in The Hill, SIFMA’s President and CEO argues that a pending proposal from the Department of Labor (DOL) could soon limit investor choice, restrict access to guidance, and raise the cost of saving for retirement.

Every day, millions of Americans work with investment professionals to help them plan for retirement.  At a time when our nation faces a looming retirement crisis, this relationship is more important than ever.  Unfortunately, the Department of Labor (DOL) could soon jeopardize this vital relationship with a proposal that could limit investor choice, restrict access to guidance, and raise the cost of saving for retirement.

Investment professionals work with a wide-range of American investors from hard-working families to small business owners to seniors. They help them determine how much they will need to save for retirement, provide guidance and education, and help them maneuver through a variety of investment options. Americans trust their investment professional and rely on them as they prepare financially for major life events like changing jobs, starting a family, or retiring.

Both before and since the creation of the IRA in 1975, retirement investors have been able to choose the type of investment professionals and services they want and the manner in which they prefer to pay for these services.  Some choose to work with an investment adviser, who provides individualized investment advice for an asset-based advisory fee, hourly fee, or annual retainer.

Most investors, particularly middle class Americans and small business owners, choose to work with registered broker-dealers, who are paid commissions when they buy or sell investments and who provide investment education and guidance as part of those brokerage services. For those who trade less frequently, particularly in IRAs, and particularly those with smaller accounts, this is a more affordable option.

Right now, investors have a choice, something Congress recognized when they drafted the Dodd-Frank Act, and directed the Securities and Exchange Commission to study the standard of care that brokers and investment advisers provide their customers.  Congress authorized the SEC, and it alone, to take action if deemed necessary.  The securities industry strongly supports that approach.

The DOL, however, seems to believe that Americans are no longer capable of deciding what type of investment professional or fee structure works best for them, and in fact could force them to pay more for services they don’t want or need.  Worse, some smaller investors could end up being left out completely as a result of the DOL’s proposal.  The DOL tried this before in 2010, but withdrew its proposal due to criticism from employers, service providers, and members of Congress on both sides of the aisle. But, they’ve announced they will try again.

We should be doing all we can to help Americans save as much as possible for their future. Unfortunately, the DOL’s proposal would likely interfere with the SEC’s efforts, raise costs, restrict access to individual guidance, and limit choices. Congress and the Administration should tell the DOL to stand-down and allow the SEC to continue its work. To do otherwise will only worsen an already troubling national retirement situation.

Kenneth E. Bentsen, Jr.
President and CEO
SIFMA