INDIANAPOLIS — U.S. Sen. Dan Coats, R-Ind., wants Congress to halt implementation of a federal regulation requiring financial advisers put their clients' economic interests ahead of their own.
The "fiduciary standard" mandated by a U.S. Department of Labor rule issued this month, and set to take effect Jan. 1, 2018, obligates individuals providing financial advice to act with care, skill, prudence and diligence on behalf of retirement plan participants and to disclose any conflicts of interest.
The Labor Department estimates that Americans annually lose about 1 percent of their retirement savings, or $17 billion, when advisers sell them less-than-optimal investment products that kick back significant commissions or fees to the adviser.
"It's a very simple principle: You want to give financial advice, you've got to put your client's interests first," said President Barack Obama, a Democrat.
Coats claims the new rule will make retirement planning unaffordable for low- to middle-class Americans because their accounts are not valuable enough for advisers to take on the legal liability associated with the fiduciary standard.
"(This) harmful new regulation ... will have devastating effects on retirement planning by hard-working families and small businesses," Coats said.
He is among 33 Republican senators sponsoring a "Resolution of Disapproval" that could undo the rule if two-thirds of both the House and Senate agree to override Obama's anticipated veto of the resolution.
That is unlikely to happen since the Republican-controlled Congress has failed to overturn any Obama administration regulation using the technique.
U.S. Rep. Marlin Stutzman, R-Howe, and U.S. Rep. Todd Young, R-Bloomington, who are vying to succeed Coats in the Senate, last year supported House legislation that would have prevented the Labor Department from issuing the fiduciary standard rule.
That proposal did not advance through the Senate.