Rep. Wagner Introduces Bill To Kill The DOL Rule

Rep. Ann Wagner, R-Mo., has introduced legislation that would create a new advisory standard somewhere between fiduciary and suitability.

Wagner first announced her plans to introduce legislation that would eliminate the controversial Department of Labor fiduciary rule in July.

Wagner's bill also would eliminate the fiduciary rule's prohibited transaction exemptions.

It would amend the Securities Exchange Act of 1934 to include a best interest standard of care for brokers advising investors in the retail market.

The DOL rule only covers anyone working with retirement accounts.

Under Wagner's proposal, an investment recommendation would satisfy the best interest standard if it reflected “reasonable diligence” on the part of the agent/advisor. Her definition of "reasonable diligence" would be modeled on FINRA's existing definition.

Likewise, agents/advisors would need to exercise reasonable “care, skill, and prudence,” based on a customer’s individual investment needs, a draft of the bill stated.

Unlike the DOL rule, the Wagner bill does not make proprietary products or more expensive products subject to a prohibited transaction. The bill also includes language that would render state-level fiduciary rule efforts null.

Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at [email protected].