White House Rule Could Block 401(k) Participants from Advice
FOR IMMEDIATE RELEASE
ARLINGTON, VA, (February 23, 2015) –The National Association of Plan Advisors (NAPA) issued the following statement in response to the delivery of a new version of the fiduciary rule proposal to the Office of Management and Budget for review.
Today the White House launched an attack on advisors and so-called “hidden fees” and “backdoor payments” by moving forward with a regulation that has its own hidden backdoor effect — keeping many Americans from working with the trusted advisor of their choice, even in the critical decision regarding rollovers from their 401(k) and 403(b) plans.
“People should be protected from unfair and deceptive practices,” said Brian Graff, Executive Director of the National Association of Plan Advisors (NAPA), “but all indications are that this rule will block Americans from working with the financial advisors and investment providers they trust simply because they offer different financial products — like annuities and mutual funds — with different fees. This rule could even restrict who can help you with your 401(k) rollover.”
A previous version of the controversial regulation was withdrawn in 2010 following harsh bipartisan criticism of its potential impact on access to professional investment advice, particularly for lower- and middle-income workers.
“The best way to address concerns about “hidden” fees is through better transparency, not by blocking 401(k) participants from working with the advisor of their choice,” Graff explained. “If the administration moves forward with this proposed rule, American savers will be forced to pay out-of-pocket for their financial advice, or be limited to financial products with identical fees. Tens of millions of American savers who cannot afford to pay out-of-pocket will lose access to their financial advisor or be severely restricted in their choice of financial products. This is a wolf in sheep’s clothing. This so-called ‘conflict-of-interest’ rule is really the ‘No Advice’ rule.
“No advice means less retirement security. People who have had a financial advisor for 4-6 years have 58% more assets than those who have not, so it is not surprising that 80% of people feel more secure about retirement because they have worked with an advisor of their choice. The ‘No Advice’ rule can be dressed up to look like a consumer-friendly proposal, but when you look beneath the feel-good rhetoric, what you find is a dangerous regulatory overreach that should be stopped before it does serious harm to the retirement security of millions of working — and retired — Americans.“
The National Association of Plan Advisors was created by and for retirement plan advisors. Membership is also open to other retirement industry professionals who support the interests of plan advisors. NAPA is the only advocacy group exclusively focused on the issues that matter to retirement plan advisors.
More information about NAPA is available at www.napa-net.org.
Media Contact: Don Jackson, (703) 516-9300 Ext. 169, [email protected]
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