Disapproving A Rule Submitted By the Department of Labor
Floor Speech
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Mr. BOOKER. Mr. President, I rise today to join my colleagues in supporting the conflict-of-interest rule that was recently finalized by the Department of Labor. This is a fair and balanced rule that protects our Nation's retirees and savers. In fact, it is a rule that makes sure that in the midst of a retirement crisis in this country, where people are having a harder and harder time making sure that after working a lifetime they have the money they need to retire--it is bringing common sense back to that process.
I firmly believe that the conflict-of-interest rule should not be a partisan issue. That is because this rule comes down to those fundamental ideas that really know no party bounds. Again, the idea for me is about honor and common sense.
By honor, I mean the idea that we are a country that believes every American deserves a fair opportunity to succeed. Fairness is at the core of our Nation's ideals--this idea that we are all bound to do what we can to identify and change systems that stack the deck against hard- working families that play by the rules.
This body and its history have done so much to level the playing field and make sure that we have a free market and a fair market. It is because we as a nation value dignity and stand against those who seek to exploit or take advantage of others. In fact, we understand that we have an obligation to our country men and women. We have an obligation to each other to ensure that there is a level playing field that no one can take advantage of or exploit.
We participate in, abide by, and are meant to benefit from this social contract and understand that a social contract and a vibrant economy are not mutually exclusive. Actually, they reinforce one another.
These principles make America exceptional. They empower and embolden our free-market economy. They generate strength and security for more families. They ensure abundance and allow us to strive for ideals of life, liberty, and the ability to pursue happiness. So I believe we are honor bound to uphold these principles, to ensure fairness and opportunity for all. We also must understand that fairness is a key ingredient in broad-based economic growth and strength.
When I talk about common sense, I mean people have a reasonable expectation, in a free market, to be treated fairly and justly, especially in those areas that are most critical to their lives. It is rational, therefore, and just common sense, for us to insist that when we are treated by a doctor, that the doctor is going to place the interest of our health over their own financial interests. It is understandable that when we go to see a doctor, what is paramount is what is in our best interest. It is also understandable that we have that standard when it comes to the law; and, when we seek legal counsel, we are right to expect our lawyers to act in our best interest. That is the standard for doctors and for lawyers, for our health and well-being and for those legal decisions that will affect our lives profoundly.
When we seek advice on an issue as serious as our health, our livelihoods, and our finances, we expect to be treated with the highest standards of care, and those professionals--those lawyers or doctors-- shouldn't in any way be inhibited in their ability to make a livelihood. Indeed, in many cases, they should flourish.
While the vast majority in the financial industry are strong advisers who put the interests of their clients first, the challenge we have right now is that unlike doctors and lawyers, those financial advisers are not required to put the interest of their clients at the high level of a fiduciary standard. As a result of not having that same high standard of care as doctors and lawyers, there are some within that industry who actually take advantage of families trying to plan for their retirement.
A large money market manager recently said: ``As active equity managers we have all been on the hook lately to justify our value proposition. And we should be, since the facts clearly show that as an industry, we have not consistently provided the performance that investors deserve.''
Here are folks who have incredible financial knowledge, sophistication, and acumen talking to everyday Americans and putting forth this idea that they are going to help them retire with security, but they have no obligation to do what is in their best interest, to uphold the highest standard of care. That is problematic, and industry leaders understand that. They understand we cannot allow space for those who might seek to exploit families, struggling to retire, for their own financial interest.
It is this idea that is at the root of the conflict-of-interest rule--the idea that hard-working Americans saving for retirement deserve to be treated with fairness, with honor, and with a mutual obligation Americans should have toward each other, so that if they seek advice from a financial adviser, they deserve to get advice that prioritizes their needs above all others. This is about fairness. This is about common sense.
I was proud to stand with the Secretary of Labor, Secretary Perez, and my colleagues Senator Warren and Senator Murray when this final rule was announced. I am proud that prior to that, the rule went through a very lengthy and diligent process that allowed for robust feedback from all types of stakeholders. Throughout the rulemaking process, the Department of Labor demonstrated patience and inclusiveness of all perspectives, and, most of all, an unyielding commitment to protecting our Nation's workers and retirees--protecting the bedrock of our country and the very idea of the middle class; that if you work hard and play by the rules, you can retire with security and dignity.
The result of all the work of the Department of Labor and their commitment to this ideal is a fair and balanced rule based on the ideas of common sense and honor. The fact is, for so many Americans, it could not come at a more important time. In fact, it could not come at a more urgent time. We have a retirement crisis in our country. So many people are working harder and harder but are finding themselves with more month at the end of their money than money at the end of their month.
Many people are finding it harder and harder to save for retirement. In fact, right now one in three aren't saving for retirement. The Federal Reserve found that a whopping 47 percent of Americans don't have the savings to even cover a $400 emergency expense. Since the financial crisis, retirement readiness for the average American has actually decreased.
Families are seeing greater challenges now in securing their own future. They are seeing greater difficulties securing the American dream of being able to work hard, play by the rules, and retire with dignity and security. I know this personally, and my office does because we hear from constituents all the time about their real stories, not just of the difficulties of planning for retirement but in dealing with a financial industry that often takes advantage of their clients.
Last year I heard from one of my constituents in Lakewood who wrote to tell me about his mother. After losing her husband, she went to seek advice from a financial adviser to help her sort out her finances and plan for her retirement. She put her trust and her livelihood in the hands of this adviser, but the conflicted advice she received ended up costing her tens of thousands of dollars.
Saving for retirement is stressful. At kitchen tables in every town, every city across the country, families are struggling to figure out how best to save for retirement, and here was an adviser who provided conflicted advice, costing my resident in Lakewood tens of thousands of dollars because they trusted and relied on the fact that the advice the financial retirement adviser was giving them was in their best interest. This is wrong, and it is unfair.
Especially for those Americans who don't have much to begin with, the way they manage their retirement savings means so much. Huge gulfs continue to persist in retirement savings between men and women, the poor and the wealthy, and minority families and their White peers. This is a problem for all Americans, from all different backgrounds. It is a crisis in our country.
For so many Americans, in regard to this rule, there is so much at stake. Good advice from a retirement adviser can make a world of difference. In fact, it can be the difference between security and financial crisis. It can be the difference between retiring with ease versus retiring with stress and dependence. That is why the advice of a trusted retirement professional is so important.
There are many good actors in this space who know that increased transparency, increased accountability, and the idea of profitability don't need to be mutually exclusive. In fact, there are people making extraordinary livings in this space by doing the right thing for their clients. Honest, hard-working brokers know that updating the standards expected of retirement advisers is common sense, fair, and it actually helps America as a whole become stronger.
That is why industry leaders are already making changes to prepare for this rule's implementation and why the CEO of a major money management firm recently implored his industry colleagues by saying: Let's not lose sight of why clients engage us in the first place: to help them save the money they need to buy a house, send their kids to college, retire comfortably and meet any other long-term financial goals they have.
This CEO is 100 percent right, and I am happy many companies are beginning to ensure their retirement plans make the most of their employees' savings. According to a recent Wall Street Journal report, the administrative cost of retirement plans fell to their lowest level in a decade in 2015 and with this rule, they will continue to fall.
The needle is moving in the right direction. To attempt to block this rule now would be a step backward, and it would send a message to hard- working Americans and retirees that they simply don't matter enough to this body; that this body cares more about special interests than hard- working families. It cares more about financial advisers on Wall Street and their ability to exploit middle-class Americans than it does those middle-class Americans who believe in the American dream that is being put at risk. To not support this rule would be to roll back what we all know; that we can create a win-win and a fair economy that doesn't exploit people who are vulnerable but uplifts them, where both financial adviser and middle-class retirees can have success. I know men and women in our country--and many who serve here--who know and understand the challenges of planning for retirement.
Look, on the day this rule was announced earlier this year, I understood some people would try to fight this, and I turned to the folks listening and said: Look, this fight is not over. We are going to have to continue. Let us as a nation fight for what is right, not for the special interests of the wealthy few. Let's not allow people to feast upon the retirement savings from the hard work of others, but let's fight to affirm the middle-class dream in America. Let's fight to make sure we are doing right by folks. Let's create a level playing field.
This is a fight for people like the constituent of mine who not only lost her husband but too much of her savings and now is trying to pick up the pieces. This fight is not over for hard-working families across this country who are diligently saving for retirement and for whom these hidden fees, unfortunately, threaten to undermine decades of hard work. These hidden fees are insidious. These hidden fees allow some advisers to exploit people for their own enrichment. These hidden fees are un-American.
We must continue to make sure those hard-working advisers who provide exemplary levels of service, who prioritize their clients' interests, are the ones being elevated in this fairer system and not being maligned by those few bad actors who feast upon the savings of other people.
This fight has to be about what it means to be an American. That is what this body did when it passed the Employee Retirement Income Security Act 40 years ago. We believed in the idea that America is a place where if you work hard and you play by the rules, you can retire with dignity and don't have to worry that your doctor or your lawyer or your financial adviser will exploit you and thrust you into insecurity or worse.
This is what we must do in this body now. In the spirit of past actions, we must put the interest of our middle-class constituents first, plain and simple. This rule is fair. This rule is balanced. This rule helps our free market economy. This rule ensures that the highest standard will be applied to something as precious and fundamental as our retirement savings. It preserves honor in this business. It preserves honor for America. The needle has already moved forward. We cannot afford to go back.
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