Financial Advice

November 2005

Both Democrats and Republicans appear to agree about the importance of providing incentives and protections for employers who offer their employees financial advice from a “qualified investment advisor.”

The latest GOP pension reform bill includes an investment advice proposal that has passed that had previously passed the House three times with bipartisan support. Under the bill, employers would be able to provide workers with access to a qualified investment advisor and provides for fiduciary and disclosure safeguards to ensure that the advice is in the best interest of the employees.

The measure, which was reported out of the House Education & the Workforce Committee, was included in a larger pension reform bill that primarily addresses private sector pension plan issues.

A similar proposal was included in the Democrats’ AmeriSave retirement savings plan, offered in the summer. In the Democratic plan, employers would receive an unspecified tax credit to encourage access to independent financial advisors for those eligible for the AmeriSave retirement savings plan.

Prospects for the advice provisions will depend on how Congress proceeds on pension reform and retirement savings initiatives. The bill passed by the Senate prior to the Thanksgiving break included language to protect employers. It appears likely that the final pension legislation, if it passes, will include financial advice protections.