As part of his effort to convince Americans that the Republican Party is still capable of offering a coherent agenda for the future and hasn’t been entirely reduced to Donald Trump’s personal vassal state—or, for that matter, a band of nihilistic anti-government lunatics—House Speaker Paul Ryan unveiled a new policy platform/branding exercise on Tuesday titled “A Better Way.” Because this is a Paul Ryan joint, and Paul Ryan is still determined to shed his 2012-era image as an unfeeling Ayn Rand acolyte by talking at length about his concern the poor, the document includes an anti-poverty plan. Which is a laugh riot.
Well, not all of it. Most of the agenda is a rehash of, or at least a variation on, material Ryan has trotted out before. Inspired by the welfare reforms of the 1990s, the speaker still wants to push more safety net beneficiaries to go to work, devolve more program control down to state and local officials, and yet somehow increase accountability and carefully monitor results (which is sort of ironic, since welfare reform pretty much set states loose to do whatever the heck they wanted with little federal oversight). There’s also some talk about increasing the Earned Income Tax Credit for low-wage workers—which is one of those nice, liberal-conservative consensus positions that never seems to go anywhere.
So far, so dull. But then, buried deep on the second-to-last page, is a bit so obviously craven that I haven’t been able to stop chuckling about it for the past hour or so. In the name of fighting poverty and encouraging upward mobility, Paul Ryan and the House GOP want to make it easier for financial advisers to screw over their clients.
Specifically, Ryan and the GOP would like to abolish the Department of Labor’s recently released “fiduciary rule,” which once it’s fully implemented in 2018 will simply require that investment professionals act in their clients’ best interests when offering advice on their retirement accounts. You may be shocked to discover that this is, in fact, a new thing. But traditionally, advisers have been permitted to consider their own bottom lines when deciding where to steer their clients’ money, so long as the investments are “suitable” to the customers’ needs. That’s left the door open for massive and costly conflicts of interest, since brokers have been allowed to push expensive, high-fee savings products that also happen to offer them a fatter commission, even when their client might just be better off with, say, a low-cost index fund.
The fiduciary rule will end that practice, which the Obama administration estimates costs consumers billions of dollars each year in retirement savings. Of course, the change has given some corners of the financial services industry fits, since it’s ruining one very profitable business model. Conservatives, meanwhile, have claimed the rule will make it harder for low- and middle-income families to get financial advice, which is how it makes its way into Paul Ryan’s anti-poverty agenda.1 Here’s the explanation:
The last thing Washington should do is create barriers to the retirement security the American people need. Unfortunately, a Department of Labor regulation will make it harder to save and plan for retirement. Under the Department’s extreme approach, many low- and middle-income families will no longer be able to see the trusted financial advisors they rely on for retirement advice. Additionally, fewer small businesses will offer employees a retirement plan because the small business owner will lose access to financial advice. Congress should reject this flawed approach, and instead promote smart policies that will help more American workers retire with the dignity and financial security they deserve.
This is silly. Any family that was previously getting ripped off by an adviser steering it into high-fee investment products is almost certainly better off putting its money into a Vanguard retirement fund anyway (and that free bit of insight isn’t exactly hard to find online). The basic consumer protections offered by the fiduciary rule aren’t going to deprive anybody of essential financial advice, and fighting it is an obvious sop to a powerful industry. Trying to cloak it in the language of an anti-poverty effort is as sad as it is hilarious.
Then again, at least there’s this:
1 I assume the retirement stuff is in there because Ryan wants to stop people from falling into poverty during their old age. Of course, forcing people of moderate means to rely on their own personal savings is, in and of itself, a good way to ensure more senior citizens end up broke than necessary. But I digress.