The bill, known as the Retirement Security Advice Act (HR 2269), would allow providers to give such advice even when their own funds are involved.
Appearing before the House Subcommittee on Employer-Employee relations, Assistant Secretary of Labor for Pension and Welfare Benefits Ann L. Combs pointed to a July 9 New York Times article concerning recent losses suffered by workers' 401(k) plans. The committee's work, she said, "could not come at a more opportune time."
Combs remarked that current law unintentionally discourages employers from providing their workers with access to high-quality investment advice. She praised provisions in the bill designed to shield workers against conflicted advice.
"We believe the bill creates a strong, protective framework for the provision of investment advice to participants," Combs testified.
She added: "We fully support your efforts to deal with this important issue and seek the same objectives as those proposed by your bill, strong protections and certainty for participants, employers and service providers, a level playing field, greater choice among advisers and the expansion of needed investment advice for participants and beneficiaries in 401(k) type plans."
The bill was introduced by introduced by House Education & the Workforce Committee Chairman John Boehner (R-OH).
It's meant to help workers make better investment decisions with their retirement dollars by updating federal law to allow employers to provide their workers with access to high quality professional investment advice.
Current federal law denies many workers access to investment advice that could help them manage their retirement savings, according to the bill's supporters. It was enacted long before the rise of employee-controlled pension plans, which allow employees to make most investment decisions.
Johnson said, "The importance of creating an informed, investment-minded workforce has never been more apparent. High-quality, professional investment advice must be readily available. Let's close this advice gap to ensure that everyone can pursue the American dream, not just a selected few."
Boehner echoed the comments of Combs and other witnesses, saying, "I believe that this legislation will give workers the kind of protections they need, but will also a competitive, dynamic marketplace to develop ways of offering investment advice in a way that serves worker needs."
To check on the bill's status, visit Thomas.gov.
U.S. Labor Department, reflecting the change in administrations, has decided to support legislation that would let retirement plan providers offer financial advice to participants.