A bill that would allow employers to provide 401(k) investors with advice, either through mutual fund companies or other means, was approved a House committee today.
The House Education & the Workforce Committee approved the bill, known as the Retirement Security and Advice Act, by a vote of 29-17. If signed into law, it would clarify the fiduciary responsibilities of plan providers and financial planners and allow fund companies to offer advice to investors provided any conflicts of interest are disclosed.
Critics, including some financial planners, say the bill does not adequately protect investors from biased advice from the likes of fund companies that could, theoretically, steer investors toward products that yield higher profits.
The bill has 52 bipartisan cosponsors and was authored by Chairman John Boehner (R-Ohio). Supporters are determined the bill pass the full House by year-end. Officials have said they are unsure of its prospects in the Senate.
The Bush administration, meanwhile, reaffirmed its support of the legislation today, saying in a letter by Labor Secretary Ann Combs that the bill is an "effective federal response to the current needs of American workers."