Welcome to Financial Advisor IQ

Lawmakers Want Universal Retirement and Revamp of Advisor Act

June 14, 2016

Lawmakers in the House of Representatives are following their Senate colleagues by introducing a bill that would ensure universal retirement coverage for workers whose employers don’t offer a plan, InvestmentNews writes.

The legislation, co-sponsored by Jared Huffman, D-Calif., and Suzanne Bonamici, D-Ore., would create an American Savings Account for private-sector employees, similar to the Thrift Savings Plan geared toward federal employees, the publication writes.

Employees without a workplace-provided retirement plan would be automatically enrolled in the ASA but could opt out or change the amount of their contributions, InvestmentNews writes. Employers, meanwhile, would be allowed to make tax-advantaged contributions to their employees’ accounts, according to the publication.

According to Huffman, the legislation is modeled on state-sponsored initiatives in California and Oregon to ensure retirement savings for workers regardless of availability of employer-sponsored plans, InvestmentNews reports.

Rep. Suzanne Bonamici (Getty)

The House bill follows a similar piece of legislation introduced in January in the Senate by Sen. Jeff Merkley, D-Ore., the publication writes. It comes more than two years after President Barack Obama’s office rolled out its myRA retirement savings accounts, a voluntary savings program that invests in guaranteed government bond funds that employers can offer through Roth individual retirement accounts, according to InvestmentNews.

Meanwhile, last week Sen. Elizabeth Warren, D-Mass. and Mike Lee, R-Utah, have introduced a bipartisan bill aimed at making it easier for graduate and postdoc students to save for retirement by allowing them to deposit funds from a stipend or a fellowship into IRAs, the publication writes.

In the meantime, a bipartisan group of House lawmakers has introduced a bill to “modernize” the Investment Advisors Act of 1940, ThinkAdvisor writes.

The bill, introduced by Robert Hurt, R-Va., and co-sponsored by Juan Vargas, D-Calif., Steve Strivers, R-Ohio, and Bill Foster, D-Ill., aims to revamp several Securities and Exchange Commission rules on the use of testimonials and references in advertising, custody regulations, advertising and more, the web publication writes.

One measure would force the SEC to grant exceptions to the requirement of annual surprise exams for some private funds, according to ThinkAdvisor. Another provision of the bill would undo the prohibition on advisors’ inclusion of testimonials and references to past recommendations when marketing materials are sent only to sophisticated and high net worth investors, the web publication writes.

Another key measure of the bill would overturn the requirement that advisors to private equity funds register with the SEC, according to the AugustaFreePress.com.

A recent SEC settlement against Blackstreet Capital Management, in which the private equity firm was ordered to pay a $3.1 million fine for operating as an unregistered broker-dealer, highlighted the regulator’s renewed scrutiny of the issue, as reported previously. According to a statement from Hurt, the SEC registration requirement puts undue strain on private equity firms “despite the fact that such firms pose no systemic risk to the financial system,” AugustaFreePress.com writes.

The legislation is supported by Karen Barr, president and CEO of the Investment Adviser Association, who said in a statement that some provisions of the Investment Advisers Act “impose undue burdens on investment advisors – most of which are small businesses – without commensurate investor benefit,” ThinkAdvisor writes. The House Financial Services Committee is scheduled to markup the bill Wednesday, according to the web publication.

By Alex Padalka
  • To read the Augusta Free Press article cited in this story, click here.
  • To read the InvestmentNews article cited in this story, click here.
  • To read the InvestmentNews article cited in this story, click here.
  • To read the ThinkAdvisor article cited in this story, click here.