Let the DOL act on fiduciary

Last week, the House of Representatives approved legislation that would prevent the Labor Department from issuing a final rule on establishing a fiduciary standard for retirement plan advisers until the Securities and Exchange

Commission finalizes its own uniform fiduciary standard.

With any luck, this is as far as this legislation gets.

Although President Barack Obama has vowed to veto the bill if it ever reaches his desk, that hasn’t stopped supporters from looking for sponsors in the Senate. So far, they haven’t found anyone, yet Rep. Ann Wagner, R-Mo., the bill’s sponsor in the House, sounded optimistic last Tuesday.

“We are working on some things behind the scenes with the Senate to move this through,” she said, pointing to a letter signed by 10 Democratic senators that urges the Labor Department to delay the rule. “We’re just in the middle of the game, and I want to see it all the way through.”

Ms. Wagner’s bill is misguided and should be allowed to die on the vine.

The Labor Department has been working on this proposal for three years and is getting close to the finish line. To tie its proposal to what the SEC may or may not do regarding a fiduciary standard for retail advice could delay this much-needed proposal indefinitely and maybe forever.

Arguments about coordination between two federal agencies aside, critics of Ms. Wagner’s legislation say that this is exactly what she would like to see happen.

The Labor Department proposal would establish that those giving retirement investment advice should be held to a fiduciary standard requiring them to work in the best interests of their clients. Currently, many brokers dispense retirement advice, and they adhere to the less stringent suitability standard.

Investors trying to build their nest eggs for retirement in 401(k) plans or individual retirement accounts need the protection that the Labor Department proposal will afford, and they need it as soon as possible. Asking them to wait any longer is just plain wrong.