IIAA Shows Support for Retirement Security Advice Act

December 5, 2001

A bill that would empower independent agents and brokers to provide counsel to participants in employer-provided investment plans holds major potential benefits for millions of American workers, Independent Insurance Agents of America (IIAA) CEO Robert A. Rusbuldt commented.

The Retirement Security Advice Act (HR 2269) was approved by the House by a 280-142 vote. The measure is sponsored by House Education and Workforce Committee Chairman John Boehner (R-Ohio).

IIAA has put its support behind the measure, stating it opens the door for independent agents and brokers who manage retirement plans to provide advice to workers participating in a plan without having to become a registered investment advisor (RIA).

“The Retirement Security Advice Act will provide incredibly important benefits to untold millions of U.S. workers,” said Rusbuldt. “For the first time, workers who have been left on their own to make choices in their employer-provided retirement plan will be able to call on the professional counsel of an independent agent or broker to walk them through the best investment options that will help them reach their goals.”

Under present law, the Employment Retirement Income Security Act (ERISA) prohibits retirement plan participants from receiving investment advice from the financial institution managing the plan’s investment options or acting in other fiduciary or service provider capacities.

“Because of ERISA, many workers who may not be investment savvy and thus desire assistance in making the best investment choices, are not being provided individualized professional advice and their retirement investments are not building a sufficient nest egg for their golden years,” noted Rusbuldt.

HR 2269 reverses the ERISA prohibition by allowing retirement plan participants to obtain personalized investment assistance from a plan manager to help them manage retirement savings while also protecting workers from potential abuses. To protect retirement plan participants, the bill includes provisions mandating that advisers must disclose to plan participants, fees and conflicts when giving investment advice.

As long as the plan manager discloses any potential remuneration conflicts, plan sponsors are freed from concerns related to fiduciary issues, stated IIAA Senior Vice President of Federal Government Affairs Maria L. Berthoud.

“This bill would institute a new approach to retirement planning that will be beneficial to literally millions of American workers,” Berthoud stated. “The Retirement Security Advice Act will create access to professional counseling that will help workers sift through often-confusing investment choices and help them select the right retirement investment.

“IIAA sees HR 2269 as a win-win-win proposal. Workers win with sound investment advice; independent agents and brokers win because they will be able to extend the range of services they provide to their clients, community and neighbors; and all of America wins because its workforce is better prepared for their retirement years and will be less reliant on Social Security for retirement funding,” Berthoud stated.

A similar measure-the Independent Investment Advice Act (S. 1677)-pending in the Senate is expected to taken up early next year.

Sponsored by Sens. Jeff Bingaman (D-N.M.) and Susan Collins (R-Maine), S. 1677 would allow an employer that sponsors a defined contribution retirement plan to designate and monitor a qualified investment adviser for plan participants without being liable for any breach or loss with respect to the provision of advice.

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