Bill Text: NJ AR130 | 2018-2019 | Regular Session | Introduced
Bill Title: Urges United States Department of Labor to reverse decision to delay fiduciary rule for financial advisers and retirement accounts.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2018-02-15 - Introduced, Referred to Assembly Financial Institutions and Insurance Committee [AR130 Detail]
Download: New_Jersey-2018-AR130-Introduced.html
Sponsored by:
Assemblywoman ANNETTE QUIJANO
District 20 (Union)
SYNOPSIS
Urges United States Department of Labor to reverse decision to delay fiduciary rule for financial advisers and retirement accounts.
CURRENT VERSION OF TEXT
As introduced.
An Assembly Resolution urging the United States Department of Labor to reverse decision to delay fiduciary rule for financial advisers and retirement accounts.
Whereas, On February 23, 2015, President Obama signed an executive order directing the United States Department of Labor (DOL) to review and modernize its rules on retirement advice, which resulted in the "fiduciary rule"; and
Whereas, The fiduciary rule would require financial advisers to act in the best interest of their clients when investing client funds related to workplace retirement accounts; and
Whereas, In August of 2017, the DOL announced it was delaying implementation of the fiduciary rule until July 1, 2019; and
Whereas, Without the fiduciary rule, financial advisers are not required to act in the best interests of their clients, which can lead to costly conflicts of interest; and
Whereas, Advisers that are not fiduciaries are permitted to accept referral fees from asset managers for directing client's retirement savings into the managers' funds; and
Whereas, The rules currently in place, which will now continue at least until July 1, 2019, allow advisers to recommend high cost, low return investments, which are more to the benefit of the adviser than the client; and
Whereas, The lack of fiduciary protections for investors has become increasingly problematic in recent years, as many retirement assets have shifted into funds that are subject to this conflicted advice, such as Individual Retirement Accounts (IRAs); and
Whereas, When recommending the enactment of the fiduciary rule, the White House Council of Economic Advisers (CEA) estimated that conflicted advice leads to investment returns that are roughly one percentage point lower each year; and
Whereas, According to the CEA, when a retiree rolls over the balance of a 401(k) retirement savings plan into an IRA at retirement, if that retiree receives conflicted advice, it will result in a 12 percent loss in the value of the retiree's savings, if drawn over 30 years; and
Whereas, Overall, the CEA found that approximately $1.7 trillion of IRA assets are invested in products that generally generate conflicts of interest, creating an annual aggregate cost of $17 billion each year; and
Whereas, The DOL has the power to reverse its decision to delay implementation of the rule, thereby protecting the retirement assets of millions of American families from conflicted investment advice; now, therefore,
Be It Resolved by the General Assembly of the State of New Jersey:
1. This House respectfully urges the United States Department of Labor to reverse its decision to delay implementation of the fiduciary rule for financial advisers and to extend this important protection for the retirement savings of American families.
2. Copies of this resolution, as filed with the Secretary of State, shall be transmitted by the Clerk of the General Assembly to the United States Secretary of Labor.
STATEMENT
This Assembly Resolution respectfully urges the United States Department of Labor (DOL) to reverse its decision to delay implementation of the fiduciary rule for financial advisers and retirement accounts.
On February 23, 2015, President Obama signed an executive order directing the DOL to review and modernize its rules on retirement advice that resulted in the "fiduciary rule," which would require financial advisers to act as fiduciaries of their clients and in the best interest of their clients when investing client funds related to workplace retirement accounts.
In August of 2017, the DOL announced it was delaying compliance with the fiduciary rule until July 1, 2019.
Without the fiduciary rule, financial advisers are not required to act in the best interests of their clients, which can lead to conflicts of interest, such as the acceptance of referral fees for directing clients' retirement savings into certain funds.
Overall, it is estimated that approximately $1.7 trillion of IRA assets are invested in products that generally generate conflicts of interest, creating an annual aggregate cost of $17 billion each year to the retirement savings of American families.
The DOL has the power to reverse its decision to delay implementation of the rule and allow it to take effect, thereby protecting the retirement assets of millions of American families from conflicted investment advice.
