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NAIFA Comments on Proposed Investment Advice Rules Legislation
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NAIFA Comments on Proposed Investment Advice Rules Legislation

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Lee Allen, Vice President of Communications and Marketing, NAIFA
(703) 770-8112 (office)
(703) 336-2462 (mobile)

FALLS CHURCH, VA (October 1, 2009) — Today, the National Association of Insurance and Financial Advisors (NAIFA) provided its views to the House Ways and Means Committee regarding the committee’s hearing on defined benefit pension plan funding levels and investment advice rules. NAIFA’s comments focus on investment advice rules, and urge Congress to maintain current law allowing advisors to provide much-needed information to participants in 401(k) plans. 

Since passage of the Pension Protection Act (PPA) in 2006, advisor representatives have been able to provide advice to 401(k) plan participants. The 2006 Act permits advisors, under certain protective conditions, to answer questions, recommend changes to investment selections, and generally assist participants in understanding their 401(k) investments. 

NAIFA supported the PPA, and opposes the provisions in proposed legislation H.R. 2989, which would prohibit investment advisers who represent companies providing investments to 401(k) plans from providing advice to plan participants. 

“The pending legislation would recreate the 'advice gap' that existed prior to the 2006 reforms,” says NAIFA President Tom Currey, CLU, ChFC, LUTCF. “Planning for retirement is a complex task, and investors need to be fully informed as they make critical decisions about their financial futures.”

The need for advice from trained and licensed professionals to 401(k) plan participants has increased with the ever-growing shift from defined benefit plans to defined contribution plans, and is arguably even greater in light of the precipitous drop in the market over the last year and continuing market volatility. Therefore, NAIFA opposes the proposed rolling back of the changes made by the PPA. 

Currey continues, “Current law allows advisors to provide better, more complete information to plan participants to assist them in making informed choices based on their needs and risk tolerance. The proposed legislation, instead of fostering an increase in accessible, professional advice, is very likely to do just the opposite, with serious adverse consequences.”

About NAIFA: NAIFA comprises more than 700 state and local associations representing the interests of approximately 200,000 agents and their associates nationwide. NAIFA members focus their practices on one or more of the following: life insurance and annuities, health insurance and employee benefits, multiline, and financial advising and investments. The Association’s mission is to advocate for a positive legislative and regulatory environment, enhance business and professional skills, and promote the ethical conduct of its members.