[Congressional Record Volume 147, Number 158 (Thursday, November 15, 2001)]
[House]
[Pages H8189-H8202]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                 RETIREMENT SECURITY ADVICE ACT OF 2001

  Ms. PRYCE of Ohio. Mr. Speaker, by direction of the Committee on 
Rules, I call up House Resolution 288 and ask for its immediate 
consideration.
  The Clerk read the resolution, as follows:

                              H. Res. 288

       Resolved, That upon the adoption of this resolution it 
     shall be in order without intervention of any point of order 
     to consider in the House the bill (H.R. 2269) to amend title 
     I of the Employee Retirement Income Security Act of 1974 and 
     the Internal Revenue Code of 1986 to promote the provision of 
     retirement investment advice to workers managing their 
     retirement income assets. The bill shall be considered as 
     read for amendment. In lieu of the amendments recommended by 
     the Committee on Education and the Workforce and the 
     Committee on Ways and Means now printed in the bill, the 
     amendment in the nature of a substitute printed in part A of 
     the report of the Committee on Rules accompanying this 
     resolution shall be considered as adopted. The previous 
     question shall be considered as ordered on the bill, as 
     amended, and on any further amendment thereto to final 
     passage without intervening motion except: (1) one hour and 
     40 minutes of debate on the bill, as amended, with one hour 
     equally divided and controlled by the chairman and ranking 
     minority member of the Committee on Education and the 
     Workforce and 40 minutes equally divided and controlled by 
     the chairman and ranking minority member of the Committee on 
     Ways and Means; (2) the further amendment printed in part B 
     of the report of the Committee on Rules, if offered by 
     Representative George Miller of California or his designee, 
     which shall be in order without intervention of any point of 
     order, shall be considered as read, and shall be separately 
     debatable for one hour equally divided and controlled by the 
     proponent and an opponent; and (3) one motion to recommit 
     with or without instructions.

  The SPEAKER pro tempore. The gentlewoman from Ohio (Ms. Pryce) is 
recognized for 1 hour.
  Ms. PRYCE of Ohio. Mr. Speaker, for the purpose of debate only, I 
yield the customary 30 minutes to the gentleman from Texas (Mr. Frost), 
pending which I yield myself such time as I may consume. During 
consideration of this resolution, all time yielded is for the purpose 
of debate only.
  Mr. Speaker, House Resolution 288 is an appropriate but fair rule 
providing for the consideration of H.R. 2269, the Retirement Security 
Advice Act of 2001, and it is consistent with previous rules that our 
committee has reported and the House has adopted on bills affecting tax 
policy.
  This rule provides for 100 minutes of general debate in the House 
with 60 minutes equally divided and controlled by the gentleman from 
Ohio (Chairman Boehner) and the ranking member of the Committee on 
Education and the Workforce, the gentleman from California (Mr. George 
Miller). The remaining 40 minutes are equally divided between the 
gentleman from California (Mr. Thomas) and the ranking minority member 
of the Committee on Ways and Means, the gentleman from New York (Mr. 
Rangel).
  In lieu of the amendments recommended by the Committee on Education 
and the Workforce and the Committee on Ways and Means, the amendment 
printed in Part A of the Committee on Rules report accompanying this 
resolution shall be considered as adopted.
  I would simply note for my colleagues that this Part A amendment 
combines the provisions reported by the respective committees into one 
amendment. After general debate, it will be in order to consider only 
the substitute amendment offered by the gentleman from California (Mr. 
George Miller) or his designee, printed in Part B of the Committee on 
Rules report and is debatable for 1 hour.
  Finally, the rule permits the minority to offer a motion to recommit, 
with or without instructions.
  The resume waives all points of order against consideration of the 
bill as amended, as well as the amendment in the nature of a 
substitute.
  Mr. Speaker, today in America more and more working men and women are 
investing. We are no longer living in a world where only the richest 
Americans participate in the stock market. Today's workers are using 
worker-directed or 401(k)-type plans to manage and grow their 
retirement funds. In fact, it is estimated that some 43 million workers 
are, in part, managing nearly $1.5 trillion dollars in assets through 
defined contribution plans.
  Unfortunately, current law does not reflect the new world that we 
live in. For the average worker trying to get ahead, raising a family 
or simply pursuing the American dream in any way they choose, managing 
their retirement funds can be a daunting, difficult and sometimes 
costly task, and current law is keeping them from getting the direction 
that they need.
  Back home, I know many young people who are in their early careers or 
newly married. I see them and their spouses trying to understand 
today's complex financial reality. And these are smart kids. They know 
that you can never be too young to begin planning for your future. But 
with a future that involves starting a family, purchasing a home and a 
car, planning for children's educational needs, understanding 
investments for retirement is just one more difficult piece of a very 
complicated puzzle.
  Everyone who enters the workforce has dreams of one day returning to 
full-time private life. Some dream of a house on the shore or a ranch 
out west. Others dreams are more modest, a small home close to family 
and friends. But the common theme of all retirement dreams is security, 
comfort and a small reward for a lifetime's work.
  Planning for retirement today is not like it was when our mothers and 
fathers and even some of us were new to the workforce. Retirement 
planning does not simply involve Social Security and a savings 
accounts. Today's retirement planning requires an understanding of the 
many investment options and their attendant risk and benefits.
  To be sure, planning for the future through investment is a welcome 
aspect of our country's financial progress and the continued expansion 
of options for American workers. But we would be remiss if we did not 
make sure that the law kept up with these widening options.
  We must recognize that with the wealth of investment options 
available to workers, there must also be options for advice and 
direction. Workers need access to sound advice to help them maximize 
their retirement security as well as minimize their risk.
  H.R. 2269, the Retirement Security Advice Act responds to this need 
and provides Americans with access to this help.
  It allows employers to provide their workers with access to high 
quality, professional investment advice. It retains critical safeguards 
and includes new protections to ensure that participants will receive 
advice solely in their best interests.
  Advice will be provided by fiduciary advisors who will be personally 
liable for failure to act solely in the interest of a worker and 
subject to both criminal and civil sanctions through the Department of 
Labor for any breach of their fiduciary duty. It is also important to 
note that all existing securities and State insurance protections will 
continue to apply as well.
  H.R. 2269 also includes a strict, plain-language disclosure 
requirement to inform participants about any and all potential fees or 
possible conflicts of interest when advice is first given. Finally, it 
works to educate and empower

[[Page H8190]]

workers who have full control over their investment decisions and help 
to close the investment advice gap.
  Mr. Speaker, like President Bush, I too trust Americans to manage 
their own money. Indeed, everyone should be a part owner in the 
American dream. This legislation will finally allow employers to 
sponsor investment advice for their workers and empower them to make 
decisions based on solid and experienced judgment. Today's workers have 
more choices for their future. Let us make sure they have the tools to 
know which choice is best for them.
  Mr. Speaker, I urge all my colleagues to support this rule and the 
underlying legislation.
  Mr. Speaker, I reserve the balance of my time.
  Mr. FROST. Mr. Speaker, I yield myself such time as I may consume.
  (Mr. FROST asked and was given permission to revise and extend his 
remarks.)
  Mr. FROST. Mr. Speaker, I yield myself such time as I may consume, 
and thank my colleague, the gentlewoman from Ohio (Ms. Pryce) for 
yielding me the customary 30 minutes.
  Mr. Speaker, both the underlying bill and the Democratic substitute 
address an issue of great importance to the millions of Americans who 
will depend upon participant-directed pension accounts for their 
retirement income.
  Nowadays, fewer and fewer employees have traditional pension plans. 
That means that more and more will depend heavily on investments for 
their retirement income. Currently, approximately 42 million workers 
participate in such accounts.
  It is very important that these workers have access to sound 
financial planning and advice to help them make the most of their 
investments. It is also critical that the advice they receive is 
unbiased and in their best interests, not for the benefit of the 
advisor or counselor or the businesses they represent.
  The Democratic substitute makes important improvements in the 
underlying bill. Specifically, the Andrews-Rangel substitute allows 
employees to receive investment advice and education from their 
employers, while still being protected from conflicts of interest and 
unqualified investment advisors.
  The rule provides an hour and 40 minutes of debate on the bill and 
another hour on the substitute. Let us pass this rule so we may get on 
with the debate of this issue of importance to the American worker.
  Mr. Speaker, I have no further speakers, and I yield back the balance 
of my time.
  Ms. PRYCE of Ohio. Mr. Speaker, I yield back the balance of my time, 
and I move the previous question on the resolution.
  The previous question was ordered.
  The resolution was agreed to.
  A motion to reconsider was laid on the table.

                              {time}  1100

  Mr. BOEHNER. Mr. Speaker, pursuant to House Resolution 288, I call up 
the bill (H.R. 2269) to amend title 1 of the Employee Retirement Income 
Security Act of 1974 and the Internal Revenue Code of 1986 to promote 
the provision of retirement investment advice to workers managing their 
retirement income assets, and ask for its immediate consideration.
  The Clerk read the title of the bill.
  The SPEAKER pro tempore (Mr. Hansen). Pursuant to House Resolution 
288, the bill is considered read for amendment.
  The text of H.R. 2269 is as follow:

                               H.R. 2269

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Retirement Security Advice 
     Act of 2001''.

     SEC. 2. PROHIBITED TRANSACTION EXEMPTION FOR THE PROVISION OF 
                   INVESTMENT ADVICE.

       (a) Amendments to the Employee Retirement Income Security 
     Act of 1974.--
       (1) In general.--Section 408(b) of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1108(b)) is amended by 
     adding at the end the following new paragraph:
       ``(14) If the requirements of subsection (g) are met--
       ``(A) the provision of investment advice referred to in 
     section 3(21)(A)(ii) provided by a fiduciary adviser (as 
     defined in subsection (g)(4)(A)) to an employee benefit plan 
     or to a participant or beneficiary of an employee benefit 
     plan,
       ``(B) the sale, acquisition, or holding of securities or 
     other property (including any lending of money or other 
     extension of credit associated with the sale, acquisition, or 
     holding of securities or other property) pursuant to such 
     investment advice, and
       ``(C) the direct or indirect receipt of fees or other 
     compensation by the fiduciary adviser or an affiliate thereof 
     (or any employee, agent, or registered representative of the 
     fiduciary adviser or affiliate) in connection with the 
     provision of such investment advice.''.
       (2) Requirements.--Section 408 of such Act is amended 
     further by adding at the end the following new subsection:
       ``(g)(1) The requirements of this subsection are met in 
     connection with the provision of advice referred to in 
     section 3(21)(A)(ii), provided to an employee benefit plan or 
     a participant or beneficiary of an employee benefit plan by a 
     fiduciary adviser with respect to such plan, in connection 
     with any sale or acquisition of a security or other property 
     for purposes of investment of amounts held by such plan, if--
       ``(A) in the case of the initial provision of such advice 
     with regard to a security or other property, by such 
     fiduciary adviser to such plan, participant, or beneficiary, 
     the fiduciary adviser provides to the recipient of such 
     advice, at the time of or before the initial provision of 
     such advice, a clear and conspicuous description, in writing 
     (including by means of electronic communication), of--
       ``(i) all fees or other compensation relating to such 
     advice that the fiduciary adviser or any affiliate thereof is 
     to receive (including compensation provided by any third 
     party) in connection with the provision of such advice or in 
     connection with such acquisition or sale,
       ``(ii) any material affiliation or contractual relationship 
     of the fiduciary adviser or affiliates thereof in such 
     security or other property,
       ``(iii) any limitation placed on the scope of the 
     investment advice to be provided by the fiduciary adviser 
     with respect to any such sale or acquisition, and
       ``(iv) the types of services offered by the fiduciary 
     advisor in connection with the provision of investment advice 
     by the fiduciary adviser,
       ``(B) in the case of the initial or any subsequent 
     provision of such advice to such plan, participant, or 
     beneficiary, the fiduciary adviser, throughout the 1-year 
     period following the provision of such advice, maintains the 
     information described in clauses (i) through (iv) of 
     subparagraph (A) in currently accurate form for availability, 
     upon request and without charge, to the recipient of such 
     advice,
       ``(C) the fiduciary adviser provides appropriate 
     disclosure, in connection with any such acquisition or sale, 
     in accordance with all applicable securities laws,
       ``(D) such acquisition or sale occurs solely at the 
     direction of the recipient of such advice,
       ``(E) the compensation received by the fiduciary adviser 
     and affiliates thereof in connection with such acquisition or 
     sale is reasonable, and
       ``(F) the terms of such acquisition or sale are at least as 
     favorable to such plan as an arm's length transaction would 
     be.
       ``(2) A fiduciary adviser referred to in paragraph (1) who 
     has provided advice referred to in such paragraph shall, for 
     a period of not less than 6 years after the provision of such 
     advice, maintain any records necessary for determining 
     whether the requirements of the preceding provisions of this 
     subsection and of subsection (b)(14) have been met. A 
     transaction prohibited under section 406 shall not be 
     considered to have occurred solely because the records are 
     lost or destroyed prior to the end of the 6-year period due 
     to circumstances beyond the control of the fiduciary adviser.
       ``(3)(A) Subject to subparagraph (B), a plan sponsor or 
     other person who is a fiduciary shall not be treated as 
     failing to meet the requirements of this part solely by 
     reason of the provision of investment advice referred to 
     in section 3(21)(A)(ii) (or solely by reason of 
     contracting for or otherwise arranging for the provision 
     of such investment advice), if--
       ``(i) such advice is provided by a fiduciary adviser 
     pursuant to an arrangement between such plan sponsor or other 
     fiduciary and such fiduciary adviser for the provision by 
     such fiduciary adviser of investment advice referred to in 
     such section, and
       ``(ii) the terms of such arrangement require compliance by 
     the fiduciary adviser with the requirements of this 
     subsection.
       ``(B) Nothing in subparagraph (A) shall be construed to 
     exempt a plan sponsor or other person who is a fiduciary from 
     any requirement of this part for the prudent selection and 
     periodic review of a fiduciary adviser with whom the plan 
     sponsor or other person enters into an arrangement for the 
     provision of advice referred to in section 3(21)(A)(ii). Such 
     plan sponsor or other person who is a fiduciary has no duty 
     under this part to monitor the specific investment advice 
     given by the fiduciary adviser to any particular recipient of 
     such advice.
       ``(C) Nothing in this part shall be construed to preclude 
     the use of plan assets to pay for reasonable expenses in 
     providing investment advice referred to in section 
     3(21)(A)(ii).
       ``(4) For purposes of this subsection and subsection 
     (b)(14)--
       ``(A) The term `fiduciary adviser' means, with respect to a 
     plan, a person who is a fiduciary of the plan by reason of 
     the provision of investment advice by such person to

[[Page H8191]]

     the plan or to a participant or beneficiary and who is--
       ``(i) registered as an investment adviser under the 
     Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.) or 
     under the laws of the State in which the fiduciary maintains 
     its principal office and place of business,
       ``(ii) a bank or similar financial institution referred to 
     in section 408(b)(4),
       ``(iii) an insurance company qualified to do business under 
     the laws of a State,
       ``(iv) a person registered as a broker or dealer under the 
     Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.),
       ``(v) an affiliate of a person described in any of clauses 
     (i) through (iv), or
       ``(vi) an employee, agent, or registered representative of 
     a person described in any of clauses (i) through (v).
       ``(B) The term `affiliate' means an affiliated person, as 
     defined in section 2(a)(3) of the Investment Company Act of 
     1940 (15 U.S.C. 80a-2(a)(3)).
       ``(C) The term `registered representative' means a person 
     described in section 3(a)(18) of the Securities Exchange Act 
     of 1934 (15 U.S.C. 78c(a)(18)) or section 202(a)(17) of the 
     Investment Advisers Act of 1940 (15 U.S.C. 80b-2(a)(17)).''.
       (b) Amendments to the Internal Revenue Code of 1986.--
       (1) In general.--Subsection (d) of section 4975 of the 
     Internal Revenue Code of 1986 (relating to exemptions from 
     tax on prohibited transactions) is amended--
       (A) in paragraph (14), by striking ``or'' at the end;
       (B) in paragraph (15), by striking the period at the end 
     and inserting ``; or''; and
       (C) by adding at the end the following new paragraph:
       ``(16) If the requirements of subsection (f)(7) are met--
       ``(A) the provision of investment advice referred to in 
     subsection (e)(3)(B) provided by a fiduciary adviser (as 
     defined in subsection (f)(7)(C)(i)) to a plan or to a 
     participant or beneficiary of a plan,
       ``(B) the sale, acquisition, or holding of securities or 
     other property (including any extension of credit associated 
     with the sale, acquisition, or holding of securities or other 
     property) pursuant to such investment advice, and
       ``(C) the direct or indirect receipt of fees or other 
     compensation by the fiduciary adviser or an affiliate thereof 
     (or any employee, agent, or registered representative of the 
     fiduciary adviser or affiliate) in connection with the 
     provision of such investment advice.''.
       (2) Requirements.--Subsection (f) of such section 4975 
     (relating to other definitions and special rules) is amended 
     by adding at the end the following new paragraph:
       ``(7) Requirements for exemption for investment advice 
     provided by fiduciary advisers.--
       ``(A) In general.--The requirements of this paragraph are 
     met in connection with the provision of advice referred to in 
     subsection (e)(3)(B), provided to a plan or a participant or 
     beneficiary of a plan by a fiduciary adviser with respect to 
     such plan, in connection with any sale or acquisition of a 
     security or other property for purposes of investment of 
     amounts held by such plan, if--
       ``(i) in the case of the initial provision of such advice 
     by such fiduciary adviser to such plan, participant, or 
     beneficiary, the fiduciary adviser provides to the plan, 
     participant, or beneficiary, at the time of or before the 
     initial provision of such advice, a description, in writing 
     or by means of electronic communication, of--

       ``(I) all fees or other compensation relating to such 
     advice that the fiduciary adviser or any affiliate thereof is 
     to receive (including compensation provided by any third 
     party) in connection with the provision of such advice or in 
     connection with such acquisition or sale,

       ``(II) any material affiliation or contractual relationship 
     of the fiduciary adviser or affiliates thereof in such 
     security or other property,
       ``(III) any limitation placed on the scope of the 
     investment advice to be provided by the fiduciary 
     adviser with respect to any such sale or acquisition, and

       ``(IV) the types of services offered by the fiduciary 
     advisor in connection with the provision of investment advice 
     by the fiduciary adviser,

       ``(ii) in the case of the initial or any subsequent 
     provision of such advice to such plan, participant, or 
     beneficiary, the fiduciary adviser, throughout the 1-year 
     period following the provision of such advice, maintains the 
     information described in subclauses (I) through (IV) of 
     clause (i) in currently accurate form for availability, upon 
     request and without charge, to the recipient of such advice,
       ``(iii) the fiduciary adviser provides appropriate 
     disclosure, in connection with any such acquisition or sale, 
     in accordance with all applicable securities laws,
       ``(iv) such acquisition or sale occurs solely at the 
     discretion of the recipient of such advice,
       ``(v) the compensation received by the fiduciary adviser 
     and affiliates thereof in connection with such acquisition or 
     sale is reasonable, and
       ``(vi) the terms of such acquisition or sale are at least 
     as favorable to such plan as an arm's length transaction 
     would be.
       ``(B) Maintenance of records.--A fiduciary adviser referred 
     to in subparagraph (A) who has provided advice referred to in 
     such subparagraph shall, for a period of not less than 6 
     years after the provision of such advice, maintain any 
     records necessary for determining whether the requirements of 
     the preceding provisions of this subsection and of subsection 
     (d)(16) have been met. A prohibited transaction described in 
     subsection (c)(1) shall not be considered to have occurred 
     solely because the records are lost or destroyed prior to the 
     end of the 6-year period due to circumstances beyond the 
     control of the fiduciary adviser.
       ``(C) Definitions.--For purposes of this paragraph and 
     subsection (d)(16)--
       ``(i) Fiduciary adviser.--The term `fiduciary adviser' 
     means, with respect to a plan, a person who is a fiduciary of 
     the plan by reason of the provision of investment advice by 
     such person to the plan or to a participant or beneficiary 
     and who is--

       ``(I) registered as an investment adviser under the 
     Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.) or 
     under the laws of the State in which the fiduciary maintains 
     its principal office and place of business,
       ``(II) a bank or similar financial institution referred to 
     in subsection (d)(4),
       ``(III) an insurance company qualified to do business under 
     the laws of a State,
       ``(IV) a person registered as a broker or dealer under the 
     Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.),
       ``(V) an affiliate of a person described in any of 
     subclauses (I) through (IV), or
       ``(VI) an employee, agent, or registered representative of 
     a person described in any of subclauses (I) through (V).

       ``(ii) Affiliate.--The term `affiliate' means an affiliated 
     person, as defined in section 2(a)(3) of the Investment 
     Company Act of 1940 (15 U.S.C. 80a-2(a)(3)).
       ``(iii) Registered representative.--The term `registered 
     representative' means a person described in section 3(a)(18) 
     of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(18)) 
     or section 202(a)(17) of the Investment Advisers Act of 1940 
     (15 U.S.C. 80b-2(a)(17)).''.

     SEC. 3. EFFECTIVE DATE.

       The amendments made by this Act shall apply with respect to 
     advice referred to in section 3(21)(A)(ii) of the Employee 
     Retirement Income Security Act of 1974 or section 
     4975(e)(3)(B) of the Internal Revenue Code of 1986 provided 
     on or after January 1, 2002.

  The SPEAKER pro tempore. In lieu of the amendments recommended by the 
Committees on Education and the Workforce and Ways and Means printed in 
the bill, the amendment in the nature of a substitute printed in part A 
of House Report 107-289 is adopted.
  The text of H.R. 2269, as amended pursuant to House Resolution 288, 
is as follows:

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Retirement Security Advice 
     Act of 2001''.

     SEC. 2. PROHIBITED TRANSACTION EXEMPTION FOR THE PROVISION OF 
                   INVESTMENT ADVICE.

       (a) Amendments to the Employee Retirement Income Security 
     Act of 1974.--
       (1) Exemption from prohibited transactions.--Section 408(b) 
     of the Employee Retirement Income Security Act of 1974 (29 
     U.S.C. 1108(b)) is amended by adding at the end the following 
     new paragraph:
       ``(14)(A) Any transaction described in subparagraph (B) in 
     connection with the provision of investment advice described 
     in section 3(21)(A)(ii), in any case in which--
       ``(i) the investment of assets of the plan is subject to 
     the direction of plan participants or beneficiaries,
       ``(ii) the advice is provided to the plan or a participant 
     or beneficiary of the plan by a fiduciary adviser in 
     connection with any sale, acquisition, or holding of a 
     security or other property for purposes of investment of plan 
     assets, and
       ``(iii) the requirements of subsection (g) are met in 
     connection with the provision of the advice.
       ``(B) The transactions described in this subparagraph are 
     the following:
       ``(i) the provision of the advice to the plan, participant, 
     or beneficiary;
       ``(ii) the sale, acquisition, or holding of a security or 
     other property (including any lending of money or other 
     extension of credit associated with the sale, acquisition, or 
     holding of a security or other property) pursuant to the 
     advice; and
       ``(iii) the direct or indirect receipt of fees or other 
     compensation by the fiduciary adviser or an affiliate thereof 
     (or any employee, agent, or registered representative of the 
     fiduciary adviser or affiliate) in connection with the 
     provision of the advice or in connection with a sale, 
     acquisition, or holding of a security or other property 
     pursuant to the advice.''.
       (2) Requirements.--Section 408 of such Act is amended 
     further by adding at the end the following new subsection:
       ``(g) Requirements Relating to Provision of Investment 
     Advice by Fiduciary Advisers.--
       ``(1) In general.--The requirements of this subsection are 
     met in connection with the provision of investment advice 
     referred to in section 3(21)(A)(ii), provided to an employee 
     benefit plan or a participant or beneficiary of an employee 
     benefit plan by a fiduciary adviser with respect to the plan 
     in connection with any sale, acquisition, or holding of a 
     security or other property for purposes of investment of 
     amounts held by the plan, if--
       ``(A) in the case of the initial provision of the advice 
     with regard to the security or

[[Page H8192]]

     other property by the fiduciary adviser to the plan, 
     participant, or beneficiary, the fiduciary adviser provides 
     to the recipient of the advice, at a time reasonably 
     contemporaneous with the initial provision of the advice, a 
     written notification (which may consist of notification by 
     means of electronic communication)--
       ``(i) of all fees or other compensation relating to the 
     advice that the fiduciary adviser or any affiliate thereof is 
     to receive (including compensation provided by any third 
     party) in connection with the provision of the advice or in 
     connection with the sale, acquisition, or holding of the 
     security or other property,
       ``(ii) of any material affiliation or contractual 
     relationship of the fiduciary adviser or affiliates thereof 
     in the security or other property,
       ``(iii) of any limitation placed on the scope of the 
     investment advice to be provided by the fiduciary adviser 
     with respect to any such sale, acquisition, or holding of a 
     security or other property,
       ``(iv) of the types of services provided by the fiduciary 
     advisor in connection with the provision of investment advice 
     by the fiduciary adviser, and
       ``(v) that the adviser is acting as a fiduciary of the plan 
     in connection with the provision of the advice,
       ``(B) the fiduciary adviser provides appropriate 
     disclosure, in connection with the sale, acquisition, or 
     holding of the security or other property, in accordance with 
     all applicable securities laws,
       ``(C) the sale, acquisition, or holding occurs solely at 
     the direction of the recipient of the advice,
       ``(D) the compensation received by the fiduciary adviser 
     and affiliates thereof in connection with the sale, 
     acquisition, or holding of the security or other property is 
     reasonable, and
       ``(E) the terms of the sale, acquisition, or holding of the 
     security or other property are at least as favorable to the 
     plan as an arm's length transaction would be.
       ``(2) Standards for presentation of information.--The 
     notification required to be provided to participants and 
     beneficiaries under paragraph (1)(A) shall be written in a 
     clear and conspicuous manner and in a manner calculated to be 
     understood by the average plan participant and shall be 
     sufficiently accurate and comprehensive to reasonably apprise 
     such participants and beneficiaries of the information 
     required to be provided in the notification.
       ``(3) Exemption conditioned on continued availability of 
     required information on request for 1 year.--The requirements 
     of paragraph (1)(A) shall be deemed not to have been met in 
     connection with the initial or any subsequent provision of 
     advice described in paragraph (1) to the plan, participant, 
     or beneficiary if, at any time during the provision of 
     advisory services to the plan, participant, or beneficiary, 
     the fiduciary adviser fails to maintain the information 
     described in clauses (i) through (iv) of subparagraph (A) in 
     currently accurate form and in the manner described in 
     paragraph (2) or fails--
       ``(A) to provide, without charge, such currently accurate 
     information to the recipient of the advice no less than 
     annually,
       ``(B) to make such currently accurate information 
     available, upon request and without charge, to the recipient 
     of the advice, or
       ``(C) in the event of a material change to the information 
     described in clauses (i) through (iv) of paragraph (1)(A), to 
     provide, without charge, such currently accurate information 
     to the recipient of the advice at a time reasonably 
     contemporaneous to the material change in information.
       ``(4) Maintenance for 6 years of evidence of compliance.--A 
     fiduciary adviser referred to in paragraph (1) who has 
     provided advice referred to in such paragraph shall, for a 
     period of not less than 6 years after the provision of the 
     advice, maintain any records necessary for determining 
     whether the requirements of the preceding provisions of this 
     subsection and of subsection (b)(14) have been met. A 
     transaction prohibited under section 406 shall not be 
     considered to have occurred solely because the records are 
     lost or destroyed prior to the end of the 6-year period due 
     to circumstances beyond the control of the fiduciary adviser.
       ``(5) Exemption for plan sponsor and certain other 
     fiduciaries.--
       ``(A) In general.--Subject to subparagraph (B), a plan 
     sponsor or other person who is a fiduciary (other than a 
     fiduciary adviser) shall not be treated as failing to meet 
     the requirements of this part solely by reason of the 
     provision of investment advice referred to in section 
     3(21)(A)(ii) (or solely by reason of contracting for or 
     otherwise arranging for the provision of the advice), if--
       ``(i) the advice is provided by a fiduciary adviser 
     pursuant to an arrangement between the plan sponsor or other 
     fiduciary and the fiduciary adviser for the provision by the 
     fiduciary adviser of investment advice referred to in such 
     section,
       ``(ii) the terms of the arrangement require compliance by 
     the fiduciary adviser with the requirements of this 
     subsection, and
       ``(iii) the terms of the arrangement include a written 
     acknowledgment by the fiduciary adviser that the fiduciary 
     adviser is a fiduciary of the plan with respect to the 
     provision of the advice.
       ``(B) Continued duty of prudent selection of adviser and 
     periodic review.--Nothing in subparagraph (A) shall be 
     construed to exempt a plan sponsor or other person who is a 
     fiduciary from any requirement of this part for the prudent 
     selection and periodic review of a fiduciary adviser with 
     whom the plan sponsor or other person enters into an 
     arrangement for the provision of advice referred to in 
     section 3(21)(A)(ii). The plan sponsor or other person who is 
     a fiduciary has no duty under this part to monitor the 
     specific investment advice given by the fiduciary adviser to 
     any particular recipient of the advice.
       ``(C) Availability of plan assets for payment for advice.--
     Nothing in this part shall be construed to preclude the use 
     of plan assets to pay for reasonable expenses in providing 
     investment advice referred to in section 3(21)(A)(ii).
       ``(6) Definitions.--For purposes of this subsection and 
     subsection (b)(14)--
       ``(A) Fiduciary adviser.--The term `fiduciary adviser' 
     means, with respect to a plan, a person who is a fiduciary of 
     the plan by reason of the provision of investment advice by 
     the person to the plan or to a participant or beneficiary and 
     who is--
       ``(i) registered as an investment adviser under the 
     Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.) or 
     under the laws of the State in which the fiduciary maintains 
     its principal office and place of business,
       ``(ii) a bank or similar financial institution referred to 
     in section 408(b)(4),
       ``(iii) an insurance company qualified to do business under 
     the laws of a State,
       ``(iv) a person registered as a broker or dealer under the 
     Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.),
       ``(v) an affiliate of a person described in any of clauses 
     (i) through (iv), or
       ``(vi) an employee, agent, or registered representative of 
     a person described in any of clauses (i) through (v) who 
     satisfies the requirements of applicable insurance, banking, 
     and securities laws relating to the provision of the advice.
       ``(B) Affiliate.--The term `affiliate' of another entity 
     means an affiliated person of the entity (as defined in 
     section 2(a)(3) of the Investment Company Act of 1940 (15 
     U.S.C. 80a-2(a)(3))).
       ``(C) Registered representative.--The term `registered 
     representative' of another entity means a person described in 
     section 3(a)(18) of the Securities Exchange Act of 1934 (15 
     U.S.C. 78c(a)(18)) (substituting the entity for the broker or 
     dealer referred to in such section) or a person described in 
     section 202(a)(17) of the Investment Advisers Act of 1940 (15 
     U.S.C. 80b-2(a)(17)) (substituting the entity for the 
     investment adviser referred to in such section).''.
       (b) Amendments to the Internal Revenue Code of 1986.--
       (1) Exemption from prohibited transactions.--Subsection (d) 
     of section 4975 of the Internal Revenue Code of 1986 
     (relating to exemptions from tax on prohibited transactions) 
     is amended--
       (A) in paragraph (14), by striking ``or'' at the end;
       (B) in paragraph (15), by striking the period at the end 
     and inserting ``; or''; and
       (C) by adding at the end the following new paragraph:
       ``(16) any transaction described in subsection (f)(7)(A) in 
     connection with the provision of investment advice described 
     in subsection (e)(3)(B), in any case in which--
       ``(A) the investment of assets of the plan is subject to 
     the direction of plan participants or beneficiaries,
       ``(B) the advice is provided to the plan or a participant 
     or beneficiary of the plan by a fiduciary adviser in 
     connection with any sale, acquisition, or holding of a 
     security or other property for purposes of investment of plan 
     assets, and
       ``(C) the requirements of subsection (f)(7)(B) are met in 
     connection with the provision of the advice.''
       (2) Allowed transactions and requirements.--Subsection (f) 
     of such section 4975 (relating to other definitions and 
     special rules) is amended by adding at the end the following 
     new paragraph:
       ``(7) Provisions relating to investment advice provided by 
     fiduciary advisers.--
       ``(A) Transactions allowable in connection with investment 
     advice provided by fiduciary advisers.--The transactions 
     referred to in subsection (d)(16), in connection with the 
     provision of investment advice by a fiduciary adviser, are 
     the following:
       ``(i) the provision of the advice to the plan, participant, 
     or beneficiary;
       ``(ii) the sale, acquisition, or holding of a security or 
     other property (including any lending of money or other 
     extension of credit associated with the sale, acquisition, or 
     holding of a security or other property) pursuant to the 
     advice; and
       ``(iii) the direct or indirect receipt of fees or other 
     compensation by the fiduciary adviser or an affiliate thereof 
     (or any employee, agent, or registered representative of the 
     fiduciary adviser or affiliate) in connection with the 
     provision of the advice or in connection with a sale, 
     acquisition, or holding of a security or other property 
     pursuant to the advice.
       ``(B) Requirements relating to provision of investment 
     advice by fiduciary advisers.--The requirements of this 
     subparagraph (referred to in subsection (d)(16)(C)) are met 
     in connection with the provision of investment advice 
     referred to in subsection (e)(3)(B), provided to a plan or a 
     participant or beneficiary of a plan by a fiduciary adviser 
     with respect to the plan in connection

[[Page H8193]]

     with any sale, acquisition, or holding of a security or other 
     property for purposes of investment of amounts held by the 
     plan, if--
       ``(i) in the case of the initial provision of the advice 
     with regard to the security or other property by the 
     fiduciary adviser to the plan, participant, or beneficiary, 
     the fiduciary adviser provides to the recipient of the 
     advice, at a time reasonably contemporaneous with the initial 
     provision of the advice, a written notification (which may 
     consist of notification by means of electronic 
     communication)--

       ``(I) of all fees or other compensation relating to the 
     advice that the fiduciary adviser or any affiliate thereof is 
     to receive (including compensation provided by any third 
     party) in connection with the provision of the advice or in 
     connection with the sale, acquisition, or holding of the 
     security or other property,
       ``(II) of any material affiliation or contractual 
     relationship of the fiduciary adviser or affiliates thereof 
     in the security or other property,
       ``(III) of any limitation placed on the scope of the 
     investment advice to be provided by the fiduciary adviser 
     with respect to any such sale, acquisition, or holding of a 
     security or other property,
       ``(IV) of the types of services provided by the fiduciary 
     advisor in connection with the provision of investment advice 
     by the fiduciary adviser, and
       ``(V) that the adviser is acting as a fiduciary of the plan 
     in connection with the provision of the advice,

       ``(ii) the fiduciary adviser provides appropriate 
     disclosure, in connection with the sale, acquisition, or 
     holding of the security or other property, in accordance with 
     all applicable securities laws,
       ``(iii) the sale, acquisition, or holding occurs solely at 
     the direction of the recipient of the advice,
       ``(iv) the compensation received by the fiduciary adviser 
     and affiliates thereof in connection with the sale, 
     acquisition, or holding of the security or other property is 
     reasonable, and
       ``(v) the terms of the sale, acquisition, or holding of the 
     security or other property are at least as favorable to the 
     plan as an arm's length transaction would be.
       ``(C) Standards for presentation of information.--The 
     notification required to be provided to participants and 
     beneficiaries under subparagraph (B)(i) shall be written in a 
     clear and conspicuous manner and in a manner calculated to be 
     understood by the average plan participant and shall be 
     sufficiently accurate and comprehensive to reasonably apprise 
     such participants and beneficiaries of the information 
     required to be provided in the notification.
       ``(D) Exemption conditioned on making required information 
     available annually, on request, and in the event of material 
     change.--The requirements of subparagraph (B)(i) shall be 
     deemed not to have been met in connection with the initial or 
     any subsequent provision of advice described in subparagraph 
     (B) to the plan, participant, or beneficiary if, at any time 
     during the provision of advisory services to the plan, 
     participant, or beneficiary, the fiduciary adviser fails to 
     maintain the information described in subclauses (I) through 
     (IV) of subparagraph (B)(i) in currently accurate form and in 
     the manner required by subparagraph (C), or fails--
       ``(i) to provide, without charge, such currently accurate 
     information to the recipient of the advice no less than 
     annually,
       ``(ii) to make such currently accurate information 
     available, upon request and without charge, to the recipient 
     of the advice, or
       ``(iii) in the event of a material change to the 
     information described in subclauses (I) through (IV) of 
     subparagraph (B)(i), to provide, without charge, such 
     currently accurate information to the recipient of the advice 
     at a time reasonably contemporaneous to the material change 
     in information.
       ``(E) Maintenance for 6 years of evidence of compliance.--A 
     fiduciary adviser referred to in subparagraph (B) who has 
     provided advice referred to in such subparagraph shall, for a 
     period of not less than 6 years after the provision of the 
     advice, maintain any records necessary for determining 
     whether the requirements of the preceding provisions of this 
     paragraph and of subsection (d)(16) have been met. A 
     transaction prohibited under subsection (c)(1) shall not be 
     considered to have occurred solely because the records are 
     lost or destroyed prior to the end of the 6-year period due 
     to circumstances beyond the control of the fiduciary adviser.
       ``(F) Exemption for plan sponsor and certain other 
     fiduciaries.--A plan sponsor or other person who is a 
     fiduciary (other than a fiduciary adviser) shall not be 
     treated as failing to meet the requirements of this section 
     solely by reason of the provision of investment advice 
     referred to in subsection (e)(3)(B) (or solely by reason of 
     contracting for or otherwise arranging for the provision of 
     the advice), if--
       ``(i) the advice is provided by a fiduciary adviser 
     pursuant to an arrangement between the plan sponsor or other 
     fiduciary and the fiduciary adviser for the provision by the 
     fiduciary adviser of investment advice referred to in such 
     section,
       ``(ii) the terms of the arrangement require compliance by 
     the fiduciary adviser with the requirements of this 
     paragraph,
       ``(iii) the terms of the arrangement include a written 
     acknowledgment by the fiduciary adviser that the fiduciary 
     adviser is a fiduciary of the plan with respect to the 
     provision of the advice, and
       ``(iv) the requirements of part 4 of subtitle B of title I 
     of the Employee Retirement Income Security Act of 1974 are 
     met in connection with the provision of such advice.
       ``(G) Definitions.--For purposes of this paragraph and 
     subsection (d)(16)--
       ``(i) Fiduciary adviser.--The term `fiduciary adviser' 
     means, with respect to a plan, a person who is a fiduciary of 
     the plan by reason of the provision of investment advice by 
     the person to the plan or to a participant or beneficiary and 
     who is--

       ``(I) registered as an investment adviser under the 
     Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.) or 
     under the laws of the State in which the fiduciary maintains 
     its principal office and place of business,
       ``(II) a bank or similar financial institution referred to 
     in subsection (d)(4),
       ``(III) an insurance company qualified to do business under 
     the laws of a State,
       ``(IV) a person registered as a broker or dealer under the 
     Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.),
       ``(V) an affiliate of a person described in any of 
     subclauses (I) through (IV), or
       ``(VI) an employee, agent, or registered representative of 
     a person described in any of subclauses (I) through (V) who 
     satisfies the requirements of applicable insurance, banking, 
     and securities laws relating to the provision of the advice.

       ``(ii) Affiliate.--The term `affiliate' of another entity 
     means an affiliated person of the entity (as defined in 
     section 2(a)(3) of the Investment Company Act of 1940 (15 
     U.S.C. 80a-2(a)(3))).
       ``(iii) Registered representative.--The term `registered 
     representative' of another entity means a person described in 
     section 3(a)(18) of the Securities Exchange Act of 1934 (15 
     U.S.C. 78c(a)(18)) (substituting the entity for the broker or 
     dealer referred to in such section) or a person described in 
     section 202(a)(17) of the Investment Advisers Act of 1940 (15 
     U.S.C. 80b-2(a)(17)) (substituting the entity for the 
     investment adviser referred to in such section).''

     SEC. 3. EFFECTIVE DATE.

       The amendments made by this Act shall apply with respect to 
     advice referred to in section 3(21)(A)(ii) of the Employee 
     Retirement Income Security Act of 1974 or section 
     4975(e)(3)(B) of the Internal Revenue Code of 1986 provided 
     on or after January 1, 2002.

  The SPEAKER pro tempore. After debate on the bill, as amended, it 
shall be in order to consider a further amendment printed in part B of 
the report, if offered by the gentleman from California (Mr. George 
Miller), or his designee, which shall be considered read, and shall be 
debatable for 60 minutes, equally divided and controlled by the 
proponent and an opponent.
  The gentleman from Ohio (Mr. Boehner) and the gentleman from New 
Jersey (Mr. Andrews) each will control 30 minutes of debate on the 
bill, and the gentleman from California (Mr. Thomas) and the gentleman 
from Washington (Mr. McDermott) each will control 20 minutes of debate 
on the bill.
  The Chair recognizes the gentleman from Ohio (Mr. Boehner).


                             General Leave

  Mr. BOEHNER. Mr. Speaker, I ask unanimous consent that all Members 
may have 5 legislative days in which to revise and extend their remarks 
and to include extraneous material on H.R. 2269.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Ohio?
  There was no objection.
  Mr. BOEHNER. Mr. Speaker, I yield myself such time as I may consume.
  My colleagues, this week we found that for the first time in our 
Nation's history, more than half of all American families have invested 
in the stock market. I think that is enormously significant. For years, 
certainly when I was growing up, we thought of the stock market as 
something only the wealthy cared about. And for the most part, it was. 
As late as 1982, fewer than 15 percent of all American households held 
stocks, bonds, or mutual funds. Right now, the number is 52 percent. 
Today, the working class and the investor class are one and the same.
  It is these new entrants into the investment markets that H.R. 2269, 
the Retirement Security Advice Act, is meant to help. We have seen an 
explosion in the number of 401(k) plans and IRAs, defined contribution 
plans in which the employee decides how much to invest and how to 
invest. As we see from this chart next to us, more than 48 million 
Americans participate in defined contribution plans today. These plans 
offer great opportunities for investors, but they also pose many risks. 
The best way to maximize opportunities and to minimize risk is to have 
access to high-quality investment advice.

[[Page H8194]]

  But access to advice has not kept pace with participation in these 
defined contribution plans. Every day, workers who are trying to figure 
out how to best invest their money go to their employers and ask for 
guidance. Sadly, current law cripples employers who want to provide it.
  So, how did we get to this point? The 1974 Employee Retirement Income 
Security Act, enacted long before the advent of 401(k)s and other 
defined contribution plans, continues to needlessly deny many employers 
the opportunity to provide their workers with investment advice 
benefits that could help them enhance their retirement savings.
  We have heard from employers that they want to provide this service 
as a benefit to help retain skilled workers. We have heard from workers 
that they want quality advisers to guide investment decisions. The 
authors of ERISA never intended for millions of individuals to have to 
become investment experts. To illustrate this point, we have the chart 
next to me. Betty Shepard, the Human Resources administrator at Mohawk 
Industries Carpet Company in Kennesaw, Georgia, testified before our 
committee that, and I will quote ``Without this bill, I fear that many 
of our employees may overreact to market fluctuations and listen to the 
commentary of family, friends or the media to make retirement planning 
decisions.''
  We know from survey after survey that a large majority of employees 
do not have access to quality investment guidance. In fact, as we see 
from this chart, only 16 percent of 401(k) participants have investment 
advice options available through their retirement plan, according to 
the Spectrum Group.
  It is this investment advice gap that H.R. 2269 seeks to close, and 
it does it in several ways. First, it streamlines the employer's duty 
in selecting and monitoring investment advisers. Employers will not be 
responsible for every piece of advice or every transaction, but when 
general problems arise, they must respond to them. Employers tell us 
this will give them the clear guidance they need to offer quality 
investment advice to their employees as a benefit. The following chart 
summarizes how this bill changes current law.
  Second, the bill maximizes competition in the investment advice 
market by allowing many of the most highly regarded investment firms to 
offer investment advice through employers. It will also protect workers 
by clearly requiring advisers to act at all times in the workers' best 
interest, and, if they have any possible conflicts of interest, to 
disclose them early and clearly.
  If they breach that fiduciary duty, they will be subject to civil 
litigation and even criminal prosecution by the Labor Department. The 
Department of Labor, which has the responsibility for protecting 
workers, tells us that this structure gives it all the authority 
necessary to protect workers from abuses. But competition is the best 
consumer protection available, and our bill creates a competitive 
marketplace that would be flexible and dynamic enough to respond to 
worker needs.
  I think everyone in this House shares the same ultimate goal of 
providing quality investment advice to workers who critically need it, 
and I urge Members today to support this bill. Employers, workers, both 
the Commerce and Treasury Secretaries, and the Nation's chief pension 
law enforcement official all support this commonsense measure. It takes 
a balanced approach for increasing worker access to advice while 
including safeguards to protect their investments without discouraging 
employers from offering any advice at all.
  I want to thank my colleague, the gentleman from Texas (Mr. Sam 
Johnson), who, as a Member of the Committee on Ways and Means and also 
as chairman of our Subcommittee on Employer-Employee Relations, has 
been instrumental in moving this bill through the two committees; and I 
want to thank him for the vital role he has played in this process.
  Mr. Speaker, we must ensure that the American dream is within the 
grasp of all of our Nation's workers, not just a select few. Access to 
quality investment advice is one way we can help rank-and-file workers 
maximize their retirement security.
  Mr. Speaker, I reserve the balance of my time.
  The SPEAKER pro tempore. Without objection, the time originally 
allotted to the gentleman from California (Mr. Thomas) will be 
controlled by the gentleman from Texas (Mr. Sam Johnson).
  There was no objection.
  Mr. ANDREWS. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I rise in opposition to the bill; and later in the 
debate the gentleman from New York (Mr. Rangel), the ranking member of 
the Committee on Ways and Means, and myself will offer a substitute 
which we believe is a more positive alternative.
  I want to proceed by agreeing with the gentleman from Ohio (Mr. 
Boehner), the chairman, and my friend, the gentleman from Texas (Mr. 
Sam Johnson), the subcommittee chairman, that there is a serious 
problem that requires a remedy, and that problem is the fact that there 
are millions of Americans, a majority of Americans, who now hold 
interest in the equity markets, in the stock markets, and that many of 
these Americans do not receive adequate advice as to the options and 
strategies they should follow in investing their money.
  There are too many people who get their investment advice from a 
neighbor, over the back yard fence, or through hearsay at an office 
gathering, or what have you, and we all agree that that is a situation 
that we want to change.
  I also want to say that Chairman Boehner and Chairman Johnson have 
been open and fair throughout this process, and I hope that we are able 
to continue working together as the legislation advances to the other 
body so that we may reach a mutually agreeable solution, and I thank 
the chairman for his openness and fairness throughout this process.
  We think that this bill is the wrong way to give investment advice 
because we think it is flawed in four essential ways:
  First of all, it is important to understand that this bill will make 
it possible for a person to receive investment advice about their 
pension assets, perhaps along with their home the most important assets 
a person owns, from someone who has a vested interest in that decision, 
in addition to or other than the interest of the pension. In other 
words, an employee of an insurance company or a bank or a financial 
services company can give advice to a pensioner that would result in 
that pensioner putting valuable pension assets into a fund where the 
advisor would do better or where the advisor would profit from the 
result of that decision. That is an important conflict of interest that 
we think is a very serious and troubling one.
  The bill does not properly reconcile that conflict of interest in 
four important ways:
  First of all, its disclosure provisions do not adequately or 
contemporaneously disclose to the investor what the risks are. If there 
is to be such advice given, we believe, Mr. Speaker, that the person 
receiving the advice should know with great clarity exactly what the 
nature of a potential conflict is at the time he or she is making the 
decision. It is not good enough to receive that disclosure months or 
even years before one makes the decision. It is not good enough that 
that disclosure be confusing, presented in the verbiage of financial 
planning professionals and not the commonsense language most of us 
would be able to understand. Because the bill does not provide for 
adequate disclosure of potential or real conflicts by investment 
advisers, it is flawed.
  Secondly, the bill does not provide for adequate qualifications of 
the investment advisers. If someone is going to be giving investment 
advice to American pensioners and American workers, that someone ought 
to be trained and qualified and accountable. There is a serious 
loophole in the underlying bill with respect to that training and 
qualification. Where there are cases where employees of large banks, 
large insurance companies, large financial services companies do not 
have that kind of adequate training, as we read the bill, they would 
still be able to give such advice. We believe that only people who are 
duly licensed and trained and qualified should be giving such advice.
  The third major flaw of this bill is it does not take adequate 
measures to make the investor aware that there are alternatives, in 
many cases better alternatives to receiving advice other

[[Page H8195]]

than receiving advice from a conflicted advisor; that there is someone 
else to whom the pensioner could turn, someone else to whom the 
employee could turn who has no stake in the outcome of his or her 
decision, who has no conflict of interest. We believe that if 
conflicted advice is to be given at all, it should only be given where 
there is a clear disclosure of the available option of an independent 
advisor for that worker or retiree, so that the person receiving the 
advice knows that there is someone to whom she or he can turn who has 
no stake whatsoever in the outcome to have the decision other than the 
best interests of the investor.

                              {time}  1115

  Finally, this bill is significantly flawed because it does not 
provide adequate remedies if someone receives advice that is wrong and 
that is a breach of fiduciary duties. The bill recognizes the fact that 
the fiduciary relationship between the adviser and the investor 
continues under this bill.
  But what happens if the advisor breaches that duty. Well, the bill 
would permit present law to continue, and present law permits the 
recovery of the lost investment; it does not permit the recovery of 
damages for the consequences of that lost investment. As a practical 
reality that means that a person who gets bad advice that is a breach 
of the fiduciary duty of the advisor will never get his or her claim to 
a court of competent jurisdiction and will never be made whole again. 
Once the horse has left the barn, it cannot be returned because the 
remedies are not sufficient under this bill.
  Mr. Speaker, for these four reasons we think that this bill is 
flawed. That is why our position in opposing this is supported by the 
voice of working people in this country, the AFL-CIO and the American 
Association of Retired Persons.
  Finally, I would recognize that the gentleman from Ohio (Mr. Boehner) 
made reference to Ms. Shepard who is the human resources administrator 
at Mohawk Industries. I would like to read for the Record some remarks 
she made in the October 21, 2001 issue of the New York Times. At the 
appropriate time I will submit the entire article for inclusion in the 
Record.
  ``Betty Shepard, human resources administrator at Mohawk Industries, 
said it had not offered advice because rules and liability were 
unclear,'' for the employer. That is my insertion. `` `We want to give 
employees a way to get easy access to reliable investment advice within 
the confines of the law.' Ms. Shepard, who testified before Congress 
last summer in favor of the bill said she `would prefer hiring an 
impartial advisor to assist employees.' '' Well, so would we.
  We believe that the four reasons that I have outlined today that are 
weaknesses in this bill justify a vote against the bill.
  Mr. Speaker, I reserve the balance of my time.
  Mr. SAM JOHNSON of Texas. Mr. Speaker, I yield myself such time as I 
may consume.
  Mr. Speaker, first of all, the process is entirely voluntary for the 
employees. The workers have full control over their investment 
decisions, not the investment advisor. H.R. 2269 does not require any 
employer to contract with an investment advisor, and no employee is 
under any obligation to accept or follow any of the advice.
  Furthermore, it requires financial service providers to fully 
disclose their fees and any potential conflict because investment 
advice may be offered only by fiduciary advisers, qualified entities 
that are already fully regulated under other Federal and State laws. 
The courts have consistently held that fiduciary duty is the highest 
form of financial responsibility to which an investment advisor can be 
held under the law.
  This bill authorizes, contrary to what the gentleman tried to imply, 
the individual participant and the Department of Labor can seek both 
criminal and civil penalties for infractions of such fiduciary duty. 
Comprehensive disclosure will inform participants of any financial 
interest advisors may have, the nature of the advisor's affiliation, if 
any, and any limits that may be placed on the advisor's ability.
  Mr. Speaker, it is a privilege to serve as the chairman of the 
Subcommittee on Employer-Employee Relations under the wing of the 
gentleman from Ohio (Mr. Boehner), and I am also the only Member of the 
House on both committees. I am pleased to report that both committees 
have passed this bill, and it was passed with bipartisan support. Now, 
more than ever, economic security goes hand in hand with retirement 
security. People are concerned when they watch their nest egg dwindle.
  Russell Morgan, a defined contribution consultant at Watson Wyatt 
Worldwide in Dallas, a management consulting firm, said ``Employees are 
having a tough time doing it on their own. For those who choose poorly, 
retirement may not be an option.'' That is just plain wrong.
  It is obvious that people need investment advice and they need it 
now. This bill does just that. This measure removes the obstacles for 
employers to provide millions of workers access to professional 
investment advice.
  The bill requires financial service providers to fully disclose their 
fees and any potential conflicts, as I said before. This bill protects 
people from fly-by-night groups or people trying to make a quick buck. 
There are a number of safeguards.
  One, under this bill, sound investment advice can only be offered by 
fiduciary advisors, qualified entities that are already fully regulated 
under other Federal and State laws. Courts have consistently held that 
fiduciary duty is the highest form of financial responsibility to which 
an investment advisor can be held under the law.
  Two, this bill authorizes the individual plan participant and the 
Department of Labor to seek both criminal and civil penalties for 
infractions of fiduciary duty.
  Three, comprehensive disclosure will inform participants of any 
financial interest, outside interest, that advisors may have. The 
nature of the advisor's affiliation, if any, with the available 
investment options, and any limits that may be placed on the advisor's 
ability to provide advice, these types of disclosure obligations, along 
with fiduciary duties, have worked well in regulating the conduct of 
advisors under Federal security laws for more than 60 years in 
protecting innocent people from scams and fraud.
  Both committees have worked hard to take a balanced approach to 
increasing access to advice while including safeguards to protect 
employers and employees.
  Without this bill, employees will continue to fend for themselves in 
today's roller-coaster market when it comes to planning their 
retirement. Help people who want to help themselves and vote for this 
bill. It is the right thing to do.
  Mr. Speaker, I reserve the balance of my time.
  Mr. McDERMOTT. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, H.R. 2269 is a bill that is sort of sitting out here, 
and there does not seem to be much interest. There are not many people 
over here, but this is a very important bill. American industry has 
moved away from fixed benefit pension systems and given people 401(k)s. 
People on this floor, we have 401(k)s, those of us who came after a 
certain date. We do not have a fixed benefit for all of our money. We 
have to put it in the stock market and see what happens.
  In 1974, we set up a restriction that the advice investors got had to 
come from somebody that was disinterested. In the last few years, the 
stock market has gone crazy and everybody has been watching their 
401(k) go up, up, up. Somebody must have gotten the idea that they were 
left out of the process, so they came with this piece of legislation.
  This legislation eliminates workers' protections. All of us want our 
workers to have people give them some advice, but we also know 
something about human nature. Human nature says if I am going to 
recommend something that is in my interest or something that is not in 
my interest, but might be good for workers, I have a tension. I have a 
conflict whether I recommend investors buy my product or whether 
investors buy the product over here that might be better for them.
  Members know everybody is not above slanting things. Everybody wants 
an advantage, as long it comes to them. What the present law does is 
prevent somebody who is offering a product from benefiting from it. 
What this piece of legislation does is say, we

[[Page H8196]]

are going to let anybody give advice, no criteria whatsoever for what 
they know about, financial instruments or anything else. They can 
recommend, if they work in the trust department of a bank, they can 
make a recommendation; and the American workers are putting their 
pension, a substantial portion of what their future pension is, in the 
hands of people who have a vested interest in directing them in a 
particular direction.
  Mr. Speaker, that, in my view, is not responsible on the part of 
Congress. I do not think we should be doing this. We have an 
alternative which the gentleman from New York (Mr. Rangel) and the 
gentleman from New Jersey (Mr. Andrews) will put forward that corrects 
this.
  Members say included in this there is disclosure. I do not know how 
many Members in this Congress can honestly say that they have ever read 
any contract they have been involved in, such as a life insurance 
policy, automobile insurance policy, a policy related to homeowners 
insurance and whatever information that is given about investments.
  Do Members read all of the way down that Charlie Brown, who is making 
the investment offerings or giving advice, also makes 3 percent on 
everything that is bought from XYZ Company? How many Members see that? 
Would it be the requirement that the person making the advice say, I 
want to bring investor's attention to page 3, line 1, that says I am 
going to make money off this if I recommend XYZ Company. There is 
nothing like that in this bill.
  My belief is that this is a bad piece of legislation; if we do not 
adopt the Rangel-Andrews amendment or the alternative, we will be doing 
a disservice to the American people.
  I do not know how many Members have been getting advice on their 
401(k)s in this place, but I bet there are not very many Members who 
have made much money in the last little while. Probably they would have 
been smarter to get out of stocks and into government securities. Who 
was telling us that? Nobody.
  That is what we are saying to the workers out there. Workers are 
going to have somebody who is running a company who says buy the stock 
in our company, put that in your 401(k). Of course, if the company goes 
belly up or whatever, we do some financial shenanigans like Enron has 
done and the investor gets clobbered, too bad. The investor has Enron 
stock, right, while the guys at the top are doing all kinds of things 
that are getting them in trouble with the Securities and Exchange 
Commission.
  I think the advice should come from somebody who does not have a 
vested interest. I think we should all vote against this bill.
  Mr. Speaker, I reserve the balance of my time.
  Mr. BOEHNER. Mr. Speaker, I yield 1 minute to the gentleman from 
Texas (Mr. Culberson).
  Mr. CULBERSON. Mr. Speaker, the Members of this Congress have many 
reasons to support this legislation, and again I believe it illustrates 
a fundamental difference between the Republican and Democrat 
philosophy. We trust people to manage their own money and their lives 
with intelligence. Nearly 42 million Americans have saved about $1.7 
trillion in 401(k) plans, and under current law those people must 
either hire their own investment advisor, rely on an employer-sponsored 
advisor, or make investment decisions on their own; whereas this 
legislation, the Retirement Security Advice Act, will give workers 
access to professional investment advice from the administrators of 
their own plan for the first time, as long as those advisors make a 
full disclosure concerning any potential conflict.
  The bill also protects employees by holding the financial advisor, 
not the employer, personally liable and subject to other criminal 
penalties if they act on behalf of any interest other than that of the 
investment portfolio or those who contribute to it.

                              {time}  1130

  Finally, Mr. Speaker, the best part of this legislation is that it is 
completely voluntary. The bill strengthens retirement security and 
gives workers access to expert investment advice when they need it. I 
urge my colleagues to join me in supporting it.
  Mr. ANDREWS. Mr. Speaker, I yield myself 20 seconds. I would simply 
say that it is of very little comfort to a pensioner who has just lost 
everything in their 401(k) that the Department of Labor may someday 
institute some civil proceeding. People need to get their money back, 
and under this bill they do not.
  Mr. Speaker, I yield such time as he may consume to the gentleman 
from California (Mr. George Miller), the ranking member of our full 
committee.
  Mr. GEORGE MILLER of California. Mr. Speaker, I thank the gentleman 
from New Jersey for yielding time and I rise in opposition to this 
legislation.
  It has been said time and again, and we all agree, that pension plan 
participants need to get additional advice on the investment of their 
moneys. We have made the point that for the new generation of workers, 
these pension plans, the 401(k) plans, are going to become an ever more 
important part of their future retirement and that we must take care 
with the investment of those funds by these employees to make sure that 
in fact that will be there when they decide to retire.
  We also know that these funds, unlike their Social Security 
retirement, are subject to the ups and downs of the market. It will be 
important how they make these investment decisions because the timing 
of when they retire may not necessarily coincide with the good cycle in 
the market, as many people have found out over the last 2 years. We now 
hear more and more of our constituents telling us because of the loss 
of the markets, because of the placement of their investments, they are 
going to have to work a couple of more years, they are not going to be 
able to retire like they thought, or one of the wage earners in the 
family is going to have to continue to work. So these funds are subject 
to the volatility of the market, but that is understood. And it is also 
understood that we believe that over the long run people will be better 
off with the investment of these funds in their 401(k)s.
  The question then comes, the question of the type of advice that they 
can be given by their employer. We know that there were many, many 
employers over the last many years that basically made a decision that 
the 401(k) funds if they were a publicly held corporation would be 
invested in the stock of that corporation. Obviously in many, many 
instances the workers in that corporation lost much of their 
investment, some of them did very well; but the concentration of the 
money in those funds, the failure to diversify that investment in many 
instances harmed the employees; and now we require that they be given 
other alternatives, that they be given other options so that they too 
can diversify their portfolio and they are not locked into a single 
stock.
  But the question now that arises in this legislation when we give 
them the option of that advice, do we give them the right to have an 
independent review of their account, an independent advisor who is in 
the business of advising, not necessarily in the business of advising 
and also managing stocks and portfolios for this client and for other 
clients?
  I think it is just basic and fundamental about treating workers with 
a set of rights about the dominion over their funds. The notion that 
somehow this changes the expense of it and is not worthwhile, this 
advice given to a group of participants is not that expensive but it 
may be terribly, terribly expensive to the employee if they do not get 
advice that is not conflicted.
  We have great brand names. We have Lehman Brothers, we have Merrill 
Lynch, we have Charles Schwab. We have houses that now are not just any 
longer investment banks, they are not just any longer stock brokerages. 
They run the gamut. They are wholly owned subsidiaries of Citicorp, or 
in fact they own other subsidiaries; and what we have are very 
complicated financial arrangements.
  In many instances, we have seen over the last couple of years, and 
especially in the downturn in the market, that a number of these 
companies hold on to advice long beyond the time when the prudent 
ordinary person would decide to sell that stock. It has become a 
standing joke now. I think they even have theme music on CNBC in the 
morning for those advisors who will not give up their recommendation to 
buy stocks even though the stock now

[[Page H8197]]

 has been down for 7 or 8 months in a row; it has lost 70 to 90 percent 
of its value, and they are still telling them to be in there. Lo and 
behold, when you start to look at some of this, as the stock exchanges 
have, you find out that they hold a position or they are managing the 
money for the executives of the company, not necessarily do they hold a 
position in that company, but they hold another position with the 
executives in managing their portfolios. They do not want to upset 
them, so they are telling the old American public, ``Buy this stock. 
We're on our way back.'' The fact of the matter is people have been 
torched. That is subject to disciplinary actions again.

  But in this legislation, that conflicted advice necessarily is not 
out of order here because they have a system of disclosure, and that 
disclosure is given once a year and then you are on your way. What you 
find out is the way the bill is written, under the law, that the 
fiduciary relationship that we keep talking about does not really exist 
because the law is set up that the person whose funds it is, the 
employee, has to make a decision, buy this stock, make this investment, 
put it in this fund. Once they do that act, they relieve the advisor 
under the law of all responsibility.
  Obviously, they should be making the decisions; but the way this 
legislation is written, once they do that, they have cleared the decks 
in terms of liability under any sense of fiduciary relationships under 
the law, because as we see under section 404 of the ERISA law: ``No 
person who is otherwise a fiduciary shall be liable under this part for 
any loss, or by reason of any breach, which results from such 
participant's, or beneficiary's exercise of control.'' Then you go to 
the law, and the law says the beneficiary must exercise control. At 
that point we are home free.
  I just think that we have to understand now that the change in the 
marketplace, the interlocking relationship between a whole range of 
financial services, a whole range of financial entities requires that 
in fact we have the means by which the employee can get independent 
advice to make their decision on. I do not believe that this 
legislation as it is currently configured does that. That is why I 
would hope that Members would support the Andrews-Rangel substitute, 
which I think is a very reasonable compromise. It provides for minimum 
advisor qualifications. Imagine that, having somebody who is in fact 
qualified to make this determination advising the individual.
  How about having meaningful disclosure? We just passed here 
legislation where we told the banks that they had to disclose what they 
are going to do with your financial data. What we found out is people 
got in the mail, sometimes they got two or three pages, sometimes they 
got one page, they got little tiny print; and the Congress is running 
around saying to the banks, Gee, that's not the disclosure we intended. 
It was the disclosure the banks intended. That is why they sent it out. 
Most people did not recognize it when they got it. But it satisfied 
disclosure. So we thought you ought to have meaningful disclosure in 
this case since you are playing with people's future retirements. We 
also think you ought to have meaningful recourse when you get bad 
advice, when you get the wrong advice. Of course, this legislation as 
it is currently written does not really provide for that.
  But most importantly, what we believe you ought to have is an 
employee who is trying to make these decisions, decisions that they 
must make today that can impact their livelihood 20 and 30, 40 years 
down the road, that they ought to have some access to independent 
advice through their employer so that they can in fact make that 
decision.
  So I would hope that we would support the substitute by the gentleman 
from New Jersey (Mr. Andrews) and the gentleman from New York (Mr. 
Rangel); and then I think we would have a workable piece of legislation 
that would do what we all recognize must be done in terms of giving 
employees greater options about the investment and more information 
about how to invest their money, but to make sure that that is offered 
in a fair and open manner to the employees.
  Mr. SAM JOHNSON of Texas. Mr. Speaker, I yield 3 minutes to the 
gentleman from Florida (Mr. Foley), a distinguished member of the 
Committee on Ways and Means.
  Mr. FOLEY. Mr. Speaker, I thank the gentleman from Texas (Mr. Sam 
Johnson) and the gentleman from Ohio (Mr. Boehner) for their leadership 
on this issue.
  In this bill there are adequate disclosure requirements. This is a 
good bill. I have heard some interesting debate today about whether the 
person should have an investment in the firm or not; should they be 
strictly giving advice. There are two schools of thought to that. I 
particularly like somebody whose money is riding along with mine 
investing in the market. If they are willing to put in their equity, I 
am a little comforted by the fact that maybe they are interested in the 
risk/reward.
  I remember in Palm Beach County, we had a bank that sold a preferred 
note and on the front of the note, it was an 11 percent coupon. But 
huge disclosure: ``This is a risky investment. This is not FDIC 
insured.''
  What happened was the consumer, the constituent, decided because of 
greed that they were willing to gamble on that. Of course when the bank 
went bankrupt and they lost their money, they started blaming the 
advisor, the person who sold them the bill. But on every document it 
was very emphatic, that this was risk based, highly speculative, no 
guarantees; and everybody then looks to the little print and says, Oh, 
boy, I didn't really read that. Well, you could not miss it.
  This legislation updates important remedies for those who invest. I 
have a 401(k) here in Congress and they send me advice and they tell me 
that over the last several years government funds have done such, 
401(k) or equities has done such. It is my decision to make whether I 
invest in equity bonds or other fixed incomes. I can choose the more 
speculative route of equities. They make it clear that that is risk 
based. That advice is mine for the taking. If I do not want to use it 
and want to test the fates and roll it all in my equity portfolio, I 
have the right to do that. In this bill, every American has that right.
  This bill, or the base text prior to this bill, has not been updated 
since 1974. That is like asking people in this Chamber to drive a 1974 
automobile. This provides a great balance between the ability of those 
savers, those consumers, to increase their retirement funds through 
prudent investment. It is specific. The solutions, the benefits and the 
problems listed in the Retirement Security Advice Act should allay any 
fears.
  Let me underscore. Today, 42 million workers invest more than $2 
trillion of assets in a 401(k). This legislation would update these 
rules to reflect this new pension environment. In addition, the bill 
would encourage employers to offer investment advisory services by 
clarifying liability rules that currently discourage employees from 
hiring employee investment advisors.
  It is a balanced, fair, fundamentally sound way for consumers to 
ready their portfolios for retirement. I encourage the House adoption 
of this important measure and thank the respective chairmen for their 
leadership on the issue.
  Mr. McDERMOTT. Mr. Speaker, I yield 4 minutes to the gentleman from 
North Dakota (Mr. Pomeroy).
  Mr. POMEROY. I thank the gentleman for yielding time.
  Mr. Speaker, I think the biggest problem today for plan participants 
of 401(k)s is that they have been given responsibility for the 
investment of their retirement funds without being given access to 
information to help them make informed decisions as they deal with 
something as important as trying to find optimal earnings on their 
retirement savings.
  I think many of us in puzzling with our Thrift Savings Plan options 
think, This is hard, this is confusing, I don't quite know if I am 
doing this in the right way. I will tell my colleagues, looking at my 
returns from the last little while, I am quite sure I am not doing it 
the right way. I could use more advice. An awful lot of people in the 
workforce today are thinking exactly the same thing. And so we need a 
strategy to get them more advice. I think the chairman's strategy 
represents a very excellent and constructive way of approaching it. The 
chairman and I are in strong agreement that as we try and get more 
advice to plan

[[Page H8198]]

 participants, we do not want to put people at risk of heavy sales 
practices that might be against their interest and have them investing 
in funds that are inappropriate for their situations.
  Therefore, if we have the following standards in a new investment 
advice regimen advanced by this legislation, I think you can actually 
get more advice and still protect the employee's interest. You need to 
have the fiduciary standard apply so that the advisor must be providing 
advice solely for the interest of the plan participant or the employee. 
You have got to have some type of administrative recourse so that if 
the individual violates that advice, you can withdraw that individual's 
license. You can take away their employment. You can put them out of 
business.
  I used to be an insurance regulator. There is not a better policing 
mechanism than being able to put the guy out of business to make 
certain that they are providing advice that is appropriate and comports 
with the legal requirements.
  Thirdly, you need to have fee disclosure. These things have cost 
loads. Increasingly, employers have shifted all of the expense to the 
employees on the loads of 401(k)s. Employees need to know what it is 
going to cost them as they look at these different options. Having a 
disclosure plan and in fact having a uniform disclosure format of fees 
is going to help the individual make sure they know what they are 
getting into as they make various investment options. And so with this 
legislation, subject to some further amendment, we are able actually to 
achieve the goal of getting more investment advice out there and 
helping people with their choices.
  I do not think that the opponents of this legislation have reflected 
enough upon the disservice we do to those in the workforce by giving 
them the responsibility of investing their own money but depriving them 
of the information to do it. Defined contribution plans presently 
represent 90 percent of all retirement savings plans in the workforce. 
There are $1.5 trillion worth of investment in 401(k) plans. But still 
we have less than a quarter of employer-sponsored defined contribution 
plans provide for advice to the workers in terms of how to invest 
within those plans.
  I have held a number of round tables across North Dakota visiting 
with employees, visiting with employers, about how we can do a better 
job with facilitating retirement savings in this country. Information 
in terms of how to best handle their retirement money is a constant 
theme raised not by the big bad industry that some on this side of the 
aisle would talk about, but by employees themselves or by employers 
reflecting what employees are asking for. We can do a better job, and 
this legislation will do it.
  Mr. BOEHNER. Mr. Speaker, I yield myself such time as I may consume, 
and I yield to the gentleman from North Dakota (Mr. Pomeroy).
  Mr. POMEROY. I thank the gentleman for yielding.
  Mr. Speaker, defined contribution plans which place the burden of 
investment decisions on workers will be the primary source of 
retirement income for an increasing number of workers. Unfortunately, 
these workers have little access to professional investment advice 
which could help them grow their retirement savings in a prudent 
manner. Current law restricts many sources of advice to workers. We 
must get additional advice to participants. I salute the gentleman from 
Ohio for his earnest efforts in trying to achieve this goal.
  This bill goes a long way in giving workers access to professional 
investment advice. In addition, it provides two important features that 
will help insulate workers from advisors who may otherwise pose a 
conflict of interest, a fiduciary duty owed to the worker and a 
disclosure of all fees and conflicts. We agree that the fiduciary duty 
of an advisor is a high standard not to be taken lightly and that any 
advisor breaching this duty should not be able to continue to give 
advice. We also agree that the bill's disclosure requirements will give 
workers a clear picture of what fees would impact their accounts and 
what conflicts the advisor has with any offered recommendation. 
However, this bill, with a few modifications, can provide further 
protections to workers without burdening financial institutions. I am 
glad that we have been able to reach an agreement in regard to these 
modifications.
  Unfortunately, we are considering this bill under a modified closed 
rule and cannot make these modifications on the floor today. These 
modifications would require the disclosure of the availability of 
independent advice providers and require the Secretary to draft model 
disclosure forms for fees. The disclosure would remind participants 
that independent advice can be sought outside of the plan context and 
the model disclosure forms will assist service providers in complying 
with the disclosure requirements. Furthermore, these models will ensure 
uniformity among the disclosures to the reasonable understanding of the 
average plan participant.
  Lastly, we have agreed to provide further clarity in this bill with 
regard to banks by restricting the provision of investment advice to 
their trust departments. It is my belief that every advisor giving 
advice under this bill should be individually licensed by a Federal or 
State regulatory agency so that when an advisor breaches his fiduciary 
duty to a participant, the regulator will have the authority to put the 
bad actor out of business.
  However, I understand that banks operate under a special regulatory 
scheme in which some investment advisors are not individually licensed 
but work within their bank's trust department. I am satisfied that 
these investment advisors working within trust departments under an 
umbrella trust license can be subject to the same administrative 
sanctions as registered investment advisors, insurance agents and 
broker dealers under this bill.
  Therefore, with these three modifications, we can provide further 
protections to workers without burdening financial institutions. As 
this bill moves through the legislative process, I ask for the 
chairman's support to make these modifications.
  Mr. BOEHNER. Mr. Speaker, in reclaiming my time, I want to thank the 
gentleman from New Jersey (Mr. Andrews), who has worked on this bill 
with me over the last several years. Although we may be in some slight 
disagreement today over how much protection is available in this bill, 
he has been a faithful partner as we have tried to reach some accord. 
The gentleman from North Dakota and I have also been working together 
to try to bring the protections in this bill into a proper balance. I 
want to thank him for bringing these pertinent modifications to my 
attention.
  I support the changes that the gentleman has described which will 
further protect workers' retirement income security. I support the 
creation of a model disclosure form as well as a requirement for 
advisors to disclose to plan participants that independent advice is 
available. In addition, I support the gentleman's proposed changes to 
the qualification section which would ensure that only licensed 
individuals provide this advice; or in the case of banks, such advice 
be provided by trust or custody department employees who are 
individually accountable to State or Federal regulators.
  During conference negotiations with the Senate, I will work with my 
colleague from North Dakota and others to make these modifications for 
the further protection of workers managing their retirement income 
assets.
  Mr. POMEROY. I thank the gentleman.
  Mr. ANDREWS. Mr. Speaker, I am pleased to yield 3 minutes to the 
gentlewoman from California (Ms. Sanchez).
  Ms. SANCHEZ. Mr. Speaker, many Americans have little knowledge about 
investing their own money. Mutual funds, stocks and bonds are very 
complicated instruments to which people pay little attention, 
especially when they have got other things to do all day long.

                              {time}  1145

  I know firsthand how complex these instruments can be because of my 
professional experience as an investment advisor.
  In concept, the Retirement Security Advice Act is a great idea. We 
must find ways to ensure that all Americans participating in retirement 
savings plans are making decisions that will help them in the long run. 
All Americans should have access to licensed investment professionals 
who can advise

[[Page H8199]]

them on what they should be investing in, how risky their portfolio 
should be and when to change plans.
  There is a major weakness in the current version of the bill, 
however. The bill allows registered, licensed banks or similar 
financial institutions to provide financial investment advice. The 
problem is that the language is not strong enough. It allows bank 
tellers or any unrelated subsidiary of these financial institutions to 
provide this advice.
  Would you want investment advice from a bank teller? How about from a 
member of the cleanup crew at an investment banking firm? These 
examples may be extreme, but they are possible under the current 
language in this bill.
  I want to make sure that all Americans are provided with the best 
opportunity to invest their retirement savings. Think of the time 
period we just went through right now. I have a father-in-law who is a 
banker, and he has plenty of people who would call him and say, ``I 
just went to a cocktail party, and why am I not getting 38 percent 
return this year?'' And no matter how much he tried to talk them 
through about their plan and their situation, they would basically say, 
``I am taking my funds to somebody else who will put me in these types 
of investments.''
  Now, my father-in-law has licenses. He has been in the investment 
banking world a long time. He has character, he has integrity. He also 
makes his living with that license. He protects it. And he would say, 
``Well, if that is what you have to do, that is what you are going to 
do, but I will not put you in those types of investments.''
  Imagine if you have someone who has no license and the pressure comes 
on. What do you do then? Well, you end up being in things you really 
should not be in.
  Sometimes we forget about the people that we are really working to 
assist here. This bill is targeted at those who could not otherwise 
afford investment advice. They are working-class Americans who teach 
our children, build our infrastructure and make this country strong.
  You probably would not take gourmet cooking advice from the fry cook 
at McDonald's, so why should people take investment advice from those 
who may not be qualified to give it?
  Let us do the right thing for all Americans. Let us make sure that 
this advice is given by licensed individuals. There are plenty of 
different types of licenses. We do not have to start a new regulatory 
situation here.
  Mr. SAM JOHNSON of Texas. Mr. Speaker, I yield such time as he may 
consume to the gentleman from Ohio (Mr. Portman), who is a member of 
the Committee on Ways and Means and who has a long history of working 
on retirement issues.
  Mr. PORTMAN. Mr. Speaker, I thank the chairman very much for yielding 
me time, and I congratulate him as a Member of the Committee on Ways 
and Means, but also as the chairman of the Subcommittee on Social 
Security that got this legislation to the floor today. He wears two 
hats, and he has done a great job in moving what is a needed piece of 
legislation to the floor.
  Also, of course, I want to commend my colleague, the gentleman from 
Ohio (Mr. Boehner), who has spent years on this issue, understanding 
that there is a need to change the ERISA laws, which are way out of 
date.
  As more and more people have moved into the defined contribution 
plans, the 401(k)s, the 403(b)s and the 457s, 90 percent of folks now 
are in these defined contribution plans. The law has not changed to 
allow them to get the type of advice they need. Only 16 percent of 
workers out there in these plans are getting any advice, only 16 
percent, yet 75 percent of them say in surveys, they are desperate to 
get that kind of advice.
  So this is a very important change in the law that has to be made in 
order to allow people, those school teachers, those folks who are in 
retirement plans all over this country who need this kind of advice, to 
be able to make better decisions.
  Recently this Congress took the lead on retirement security by 
passing legislation that dramatically expands the availability of 
defined contribution and defined benefit options. We allowed everybody 
to put more money away in their 401(k), for instance. We simplified all 
the rules and regulations for all of the pension plans, to help small 
businesses to get into this area.
  We also allowed portability, to be able to move your plan from job to 
job and to be able to integrate those plans in a seamless way into one 
account. This is extremely important, and we think it will allow for 
millions, millions more Americans, to have the kind of retirement 
security they need and to have the kind of peace of mind in retirement 
that all of us deserve.
  That was passed overwhelmingly by this House, and it is great 
legislation. The gentleman from Maryland (Mr. Cardin) and I worked on 
that for years together.
  But now we need to take the next big step, which is education. It is 
providing people with the means to understand the importance of 
retirement savings, first, on a broad sense, but also to understand 
what their options are in terms of what they can invest in if they are 
indeed going to be among those who benefit from this expansion that 
this Congress has pushed forward to get people into 401(k)s, 403(b)s, 
defined benefit plans and so on.
  So this is the next logical step, and I commend the chairman and the 
gentleman from Ohio (Mr. Boehner) for moving this forward, and the 
gentleman from California (Chairman Thomas) for getting it to the floor 
today.
  Now, we have heard some discussion here about what some people see as 
some of the deficiencies in this legislation. I would just remind 
people, read the legislation. If you are going to offer this advice, 
you have to be licensed or have to be a bank trust officer. That is in 
the legislation.
  The gentleman from North Dakota (Mr. Pomeroy), who is going to 
support the bill on the floor today, who worked very hard on this 
legislation over the years and also helped us with all the portability 
provisions in the Portman-Cardin bill, has just indicated he is going 
to support it because the chairman has agreed to even some other slight 
modifications to ensure that you do not have the conflicts of interest 
that would otherwise occur if you did not have that fiduciary duty, to 
be sure that people who do offer this advice are qualified, and, 
finally, to be sure you have the kind of disclosure that is necessary.
  This legislation increases that disclosure. As it has gone through 
the process in the Committee on Ways and Means, we were sure that there 
would be yearly disclosure, disclosure upon request, and disclosure if 
there is a material change.
  Again, this legislation is sorely needed. We wanted to encourage 
people to save more for retirement. One of the impediments now is the 
lack of good advice and the lack of good education.
  So I commend those on both sides of the aisle who have brought this 
legislation to the floor. Let us pass it today in a bipartisan way and 
send a strong message to the Senate that it is about time to help 
people out there be able to make the kind of wise decisions they should 
be making for their own retirement.

                              {time}  1200

  Mr. ANDREWS. Mr. Speaker, may I inquire of the Chair how much time 
the Committee on Education and the Workforce minority has remaining.
  The SPEAKER pro tempore (Mr. LaHood). The gentleman from Ohio (Mr. 
Boehner) has 19 minutes remaining; the gentleman from New Jersey (Mr. 
Andrews) has 11\1/2\ minutes remaining; the gentleman from Texas (Mr. 
Sam Johnson) has 9 minutes remaining; and the gentleman from Washington 
(Mr. McDermott) has 10\1/2\ minutes remaining.
  Mr. ANDREWS. Mr. Speaker, I yield myself 20 seconds.
  Mr. Speaker, the gentleman from Ohio (Mr. Portman), my friend, just 
spoke about his representation that one needs to be a trust officer of 
a bank. I would respectfully disagree. Page 10 of the bill, line 12, 
indicates an employee, agent, or registered representative of a person 
describing an institution who satisfies the requirements is qualified. 
So if there are no local applicable banking or securities laws; a mere 
employee of a bank or an insurance company is qualified to give the 
advice.
  So the gentlewoman from California (Ms. Sanchez) was correct in our 
description.

[[Page H8200]]

  Mr. Speaker, I yield 4 minutes to the gentleman from Massachusetts 
(Mr. Tierney), a committee member.
  Mr. TIERNEY. Mr. Speaker, I thank the gentleman from New Jersey for 
yielding me this time.
  Like many Members, I represent people who have worked hard and whose 
entire hope for a secure retirement may well rest on the success of 
their 401(k): leather workers, jet engine assemblers, teachers, nurses, 
and other hard-working, intelligent folks who are bright and able, but 
many of whom have little experience in understanding investment 
fundamentals. They may lack the time or even the knowledge to work 
through a mountain of financial information. They need advice that is 
given by a provider that meets at least minimum standards, one who is 
qualified and one who is subject to the laws of ERISA's fiduciary 
standards, standards of trust, and one who is free from financial 
conflict, free from divided loyalties; and they need an advisor who 
will put the worker's or investor's interests first, above profit.
  Consider this following example: two mutual funds, each posting 
annual gains of 12 percent consistently for 30 years. One fund has an 
expense fee of 1 percent, the other an expense fee of 2 percent. If you 
invested $10,000 in each fund, the fund with the lower expense fee at 
the end of 30 years would earn $229,000, but the one with the higher 
expense fee of 2 percent would have only $174,000. The mutual fund 
would pocket the difference of $55,000.
  Obviously, there may be little incentive for the advisor connected to 
the mutual fund to highlight the significance of this conflict, of his 
or her potential gain in steering someone to the higher fee investment. 
Why should we allow such a conflict of interest to exist when it is not 
necessary?
  Perhaps that is why the fund industry is lobbying so hard for this 
bill, but workers and retirees are not asking for its passage. These 
hard-working people, like other investors, need and want good, sound 
advice; but allowing money managers to make recommendations that will 
generate more income for themselves hardly falls into the realm of 
independent advice.
  In 1974, Congress chose to ban transactions between pension plans and 
parties with a conflict of interest, except under very narrow 
circumstances; and they did that for a simple reason. There is too 
great a danger that a party with a conflict of interest will act in its 
own best interests rather than exclusively for the benefit of the 
workers. That concern is no less valid today.
  Studies by the financial industry itself have found broker conflicts 
have harmed advice received by individuals, audit conflicts have 
undercut the value of audits on financial firms, analyst reports have 
shown significant evidence of bias in comparing ratings. The law, 
ERISA, was designed to protect against just these types of issues.
  Our shared goal should be to increase access to investment advice for 
individual account plan participants. We need not obliterate long-
standing protections for plan participants in order to do that. Surveys 
show that the most important reason advice may not now be offered is 
that employers have fears that they may be held liable for advice gone 
bad. The remedy for that, and it is in the bill, is that Congress 
should encourage more employers to provide independent advice by 
addressing employer liability. It should clarify that an employer would 
not be liable for specific advice if it undertook due diligence 
selecting and monitoring the advice provided. It is as simple as that. 
There is no need for conflicted advice.
  Many plans already provide for investment education. Many plans now 
provide independent investment advice through financial institutions 
and other firms without conflict. Clarifying that employers would not 
be liable if they undertake due diligence with respect to advice 
providers would further increase advice as necessary.
  Disclosure alone will not mitigate potential problems. The 
alternative bill in adding some protections and mandating a choice of 
alternative advice that is not conflicted is a better idea, but the 
best idea remains a prohibition against conflicted advice. Congress, by 
clearing up the liability issue, can encourage independent, unbiased 
investment advice that will better enable employers to improve their 
long-term retirement security, while minimizing the potential for 
employee dissatisfaction and possible litigation. This is what is in 
the best interests of the plan participants and, in fact, the best 
interests of the plan; and it certainly is in the best interests of the 
hard-working people in my district who need to know that their 
retirement is secure.
  Mr. BOEHNER. Mr. Speaker, I am pleased to yield 2 minutes to the 
gentleman from California (Mr. Dooley).
  Mr. DOOLEY of California. Mr. Speaker, I rise in support of H.R. 
2269, and I appreciate all of the work that has gone in to crafting 
this piece of legislation.
  In my estimation, this legislation is long overdue. What we are 
seeing is an increasing number of working people that are participating 
in plans that require a defined contribution. They need to have access 
to the information that allows them to make the decisions that are 
going to maximize the returns on their investments and their retirement 
accounts.
  This is inevitable, as we are seeing more and more people that are 
coming to expect that they will have more choices, more choices in the 
consumer products that they are accessing, as well as more choices in 
the financial alternatives they have to meet their retirement needs.
  I think this legislation takes a very balanced approach, and 
especially with some of the modifications that were agreed to by the 
gentleman from Ohio (Mr. Boehner) that were offered by the gentleman 
from North Dakota (Mr. Pomeroy), and I think it also addresses some of 
the remaining concerns. It does provide for adequate disclosure. It 
does provide for fiduciary responsibility. Sometimes I think we are 
being a little bit condescending to a lot of the people who are 
participating in these plans when we are not giving them the credit for 
engaging in their own due diligence by trying to determine what the 
costs will be and what the values are of the various instruments of 
investment that they are going to be considering.
  Mr. Speaker, most people today are becoming increasingly aware that 
you have to consider the cost of a particular plan. Most people are 
becoming aware that there is increasing risk and volatility with 
different mechanisms that you could invest in.
  I remember when Mr. Lieberman was engaged in his last campaign and he 
said, it is interesting, when I would be making some visits to labor 
groups and, in particular, I went into a firehouse and met with some 
firemen there, and he said, their questions to me were not about some 
of the challenges they face in their jobs, he says, their questions 
were all about their 401(k) plans and the investments that they were 
making. He said they had more information than most people that he had 
come into contact with often on Wall Street.
  Mr. Speaker, this bill takes a balanced approach. I urge its passage. 
I thank all of the people involved in this.
  Mr. BOEHNER. Mr. Speaker, I yield 2 minutes to the gentleman from 
Ohio (Mr. Oxley), the chairman of the Committee on Financial Services.
  (Mr. OXLEY asked and was given permission to revise and extend his 
remarks.)
  Mr. OXLEY. Mr. Speaker, I want to thank the gentleman from Ohio, my 
good friend, for his leadership on this issue, and the gentleman from 
Texas.
  This is an important piece of legislation that really represents 
bringing ERISA into the 21st century. Let us face it, ERISA was passed 
almost a quarter of a century ago; and times have changed. I am 
convinced, after looking at this piece of legislation, that the 
responsibilities of the investment advisors are fully covered and 
regulated by the Securities and Exchange Commission, and by various 
State regulations. I think nobody needs to fear that these folks will 
not be regulated. They have been regulated over the years and will 
continue to be so to make sure that the investors are protected.
  I was reminded of a story the gentleman from California raised about 
the visit to the firehouse by Senator Lieberman. I had a similar 
situation in my office just last year where I had a young worker from 
my congressional district who had come in to talk to me. He was a 
member of the machinist

[[Page H8201]]

union. He did not want to talk about those kinds of issues that he had 
just heard over at the machinist union. He wanted to talk about 
investments; he wanted to talk about his future, his financial future. 
He told me he was 30 years old, he had a couple of kids, he had an IRA, 
he had a 401(k) plan, and he was interested in the future of Social 
Security, and he was also interested in his ability to make sound 
decisions of his investments and his future.
  That really is a striking example, I think, that we are seeing all 
over the country. We have over half of the households today who are 
invested in equities, over half of the households. That is a sea change 
in the way America looks at its investment opportunities. That is a 
huge change. Just 20, 25 years ago, two-thirds of people's savings were 
in bank deposits. Today, two-thirds of their savings are in equities. 
That is a huge change that we have seen in this country. Let us treat 
these workers, these folks like adults. Let us not say to them they 
need to make decisions on their own. They need the kind of advice that 
this bill provides them. I urge strong support for this legislation.
  Mr. McDERMOTT. Mr. Speaker, I yield 4 minutes to the gentleman from 
New York (Mr. LaFalce).
  (Mr. LaFALCE asked and was given permission to revise and extend his 
remarks.)
  Mr. LaFALCE. Mr. Speaker, I rise in opposition to H.R. 2269. I was 
listening to the distinguished chairman of the House Committee on 
Financial Services just now, and I have the honor of serving as the 
ranking member. I guess we have heard different things at the committee 
hearings and drawn different conclusions.
  I heard about the tremendous conflicts of interest that existed 
within securities firms. Absolutely outrageous, individuals getting 
participations within IPOs and then giving analyst advice concerning 
those IPOs. That is just one small example.
  I heard testimony that in the year 2000, of all of the 
recommendations that were given regarding stocks, 1 percent were sell 
recommendations, 1 percent in the year 2000.
  I heard testimony that talked about earnings management or earnings 
manipulation, earnings manipulation on the part of the chief financial 
officers and the chief executive officers of major corporations, 
Fortune 500 companies; earnings management, earnings manipulation by 
the audit committees of the board of directors, all, of course, with 
stock options and a vested interest in what those earnings were. And 
earnings management and earnings manipulation on the part of the 
accounting firms who often had a conflict of interest also.
  Mr. Speaker, disclosure does not do the trick. Disclosure does not 
protect the investor. In a day when we have converted from primarily 
defined benefit plans to overwhelmingly defined contribution plans, the 
need for a strong prophylactic ERISA is greater than ever. We 
eviscerate those protections within ERISA and we say, well, let us 
disclose the conflicts. That is grossly inadequate.
  Surely we need to come up with better investment advice for the 
participants within pension plans, but we also need to protect against 
conflicts. The bill does not do that. The alternative does. Maybe that 
is why the representatives of the employees in the 401(k) plans, the 
AFL-CIO and so many others, the Consumer Federation of America, et 
cetera, say support the substitute, but reject the bill that has been 
reported out of committee.
  Mr. BOEHNER. Mr. Speaker, I am pleased to yield such time as he may 
consume to the gentleman from California (Mr. McKeon), a subcommittee 
chairman over in our committee.
  Mr. McKEON. Mr. Speaker, I thank the gentleman for yielding.
  I rise today in strong support of H.R. 2269, the Retirement Security 
Service Act. I want to thank the gentleman from Ohio (Mr. Boehner) and 
the gentleman from Texas (Mr. Sam Johnson), the subcommittee chairman, 
for bringing this important legislation to the floor for our 
consideration.
  Many workers might not know it, but there is an outdated provision 
within a 27-year-old Federal law that unintentionally prohibits their 
employers from providing access to high-quality investment advice. The 
Employee Retirement Income Security Act, also known as ERISA, was 
written in 1974 at a time when no one had heard of 401(k) plans and no 
one ever imagined that so many people would participate in the stock 
market like they do today.

                              {time}  1215

  Under ERISA, the mutual funds, banks, and insurance companies that 
administer 401(k)s can only provide general investment education 
directly to participants in those plans. They are prohibited from 
providing advice about a person's specific investments.
  Since last year when the market began to slide and the economy began 
showing signs of weakness, many workers have watched their retirement 
savings dwindle. People need sound advice, especially during these 
times, to maximize their investment opportunities by making it possible 
for workers to be able to get the same kind of advice that wealthy 
individuals are able to pay for out of pocket.
  H.R. 2269 would do just that. This legislation modernizes ERISA to 
let employers give their employees access to high-quality, tailored 
investment advice, as long as financial advisors fully disclose their 
fees and any potential conflicts.
  I have heard some scare talk here about, we need to protect people 
from charlatans or from people who would take advantage of them. But I 
think that we need to give the people credit for understanding and 
being able to separate advice. The important thing is that they should 
be able to get it.
  This bill retains important safeguards and includes new protections 
to ensure that participants receive advice that is solely in their best 
interests. The measure requires that advice be given only by fiduciary 
advisors which are qualified, fully regulated entities, like insurance 
companies and banks, that would be held liable for any failure to act 
solely in the interests of the worker.
  Moreover, the whole process is completely voluntary, because the bill 
does not require any employer to contract with investment advisers, and 
no employee will be obligated to accept any advice.
  As Members can see, Mr. Speaker, H.R. 2269 provides assistance for 
hard-working Americans so that they can wisely plan their retirement 
years. Therefore, I strongly urge all my colleagues to support this 
much-needed legislation.
  Mr. ANDREWS. Mr. Speaker, I am pleased to yield 3 minutes to the 
distinguished gentlewoman from Hawaii (Mrs. Mink), a member of our 
committee.
  Mrs. MINK of Hawaii. Mr. Speaker, I thank the gentleman for yielding 
time to me.
  I rise today, Mr. Speaker, to urge a no vote on H.R. 2269, the 
Retirement Security Advice Act of 2001.
  When Congress enacted the Employee Retirement Income Security Act, 
known as ERISA, in 1964, the goal was to protect employee pension 
benefits, which it has done tenaciously since enactment.
  In the ensuing 27 years, employees have seen significant changes to 
their pension plans. Many companies no longer offer predefined benefit 
plans, and many workers place their retirement funds in stock markets 
using 401(k) and other similar investment plans.
  According to the Investment Company Institute, over 42 million people 
use 401(k)s and other similar plans. Last year, the total value of 
these plans reached $2.6 trillion. These plans offer higher returns 
and, of course, higher risks.
  In today's market, the value of one's investments could change 
drastically in the course of a year or even 1 day. With the highly 
volatile stock market, no one questions the need for providing good, 
sound, reliable advice to invest one's retirement funds. We must 
therefore ensure that the underlying principles behind ERISA remain 
intact. We must protect the interests of workers and their 
beneficiaries.
  H.R. 2269 fails to provide the basic protections that all workers 
deserve. The bill allows unqualified individuals to provide investment 
advice. We should make advisers obtain Federal and State licenses or 
other qualified certifications. They should not be connected in any way 
to the investment industry or investment companies who could benefit 
from the advice given.

[[Page H8202]]

  Advisors often receive financial rewards for recommending certain 
investments over others, but H.R. 2269 does not require advisors to 
clearly disclose their incentives for making a particular 
recommendation. Advisors can bury disclosures in a mound of paperwork 
that the average investor will not read or understand. Advisors who 
will make money on giving advice should clearly and continually warn 
workers of any conflicts of interest.
  Proponents of the bill say, well, the advice is free. This is not 
true. Each investment that the worker makes will pay from 1 to 1.5 
percent of the money invested to the broker. There is big money at 
stake involved in the advice given and the advice taken. The bill 
allows investment companies to make billions of dollars every year.
  Advisors entangled with payoffs, depending upon the advice given to 
the worker, should be absolutely forbidden in this access provision.
  The bill does not provide any remedy or penalties for tainted advice. 
I urge this House to reject this legislation.
  Mr. BOEHNER. Mr. Speaker, I am pleased to yield 2 minutes to the 
gentlewoman from Illinois (Mrs. Biggert), a member of our committee.
  Mrs. BIGGERT. Mr. Speaker, I thank the gentleman for yielding time to 
me.
  Mr. Speaker, when a person has a cold, he can go to his local 
drugstore and choose among dozens of different cold remedies. When he 
is not sure which medicine is appropriate, there is a pharmacist 
available who can provide expert advice and help him to make the best 
selection.
  Yet, when it comes to 401(k) plans in the workplace, Congress, in 
effect, has gagged the pharmacist. Employers pay good money to provide 
an excellent benefit to their employees, 401(k) plans run by 
professionals, yet our 27-year-old law, ERISA, effectively silences 
those investment professionals, denying employees a major part of the 
benefit their employer has intended for them.
  Now, more than ever, Americans investing their retirement income in 
401(k) plans need access to critical investment advice that will help 
them achieve their financial goals. The Retirement Security Advice Act 
of 2001 updates our laws so workers can have access to high-quality 
professional investment advice. These advisors will be required to 
fully disclose their fees and any potential conflicts. This legislation 
also establishes important safeguards to ensure that investors' goals 
are met.
  Mr. Speaker, let us stop gagging the pharmacist or silencing the 
investment advisor. Let us make it easier for the 42 million Americans 
who participate in 401(k) plans to choose among investments. Let us 
pass H.R. 2269, which will increase employee participation and enable 
more workers to live out their American dreams.
  I urge my colleagues to support the Retirement Security Advice Act of 
2001.
  Mr. BOEHNER. Mr. Speaker, I yield 2 minutes to the gentleman from New 
Jersey (Mr. Holt), a member of our committee.
  Mr. HOLT. Mr. Speaker, I thank the gentleman for yielding time to me.
  Mr. Speaker, I rise in support of the Retirement Security Advice Act 
of 2001. We need to be sure that the law allows families to have a wide 
range of investment advice as they plan for their retirement. As we do 
so, we need to ensure that there are adequate protections for these 
workers.
  Under the bill, there are protections. The advisors are subject to a 
fiduciary duty and will be personally liable for failure to act solely 
in the interest of the worker. Under the bill, the Labor Department is 
authorized to seek both criminal and civil penalties if an advisor 
breaches that responsibility.
  The language also contains provisions to ensure that there is full 
disclosure in plain language to the workers of fees and conflicts of 
interest. These disclosures and fiduciary protections are significantly 
stronger than the average investor has today.
  Now, the bill is not perfect. I believe that we may strengthen the 
bill by adding provisions to make sure that workers know where they can 
get a financial second opinion. I want to express my appreciation to 
the gentleman from Ohio (Chairman Boehner) for representing my views 
and agreeing to take these into consideration in conference. I want to 
continue to work with him and the gentleman from California (Chairman 
Thomas) on this subject as the bill moves through the legislative 
process.
  This bill gives workers important new options they do not now have. 
That is why we want to do it. It modernizes the law to reflect the 
realities of the real world, the way people actually invest and plan 
their retirements today. This is a step forward and worthy of support.
  Mr. ANDREWS. Mr. Speaker, I am happy to yield 3 minutes to the 
gentlewoman from California (Ms. Woolsey), a real authority on human 
resources and employee relations.
  (Ms. WOOLSEY asked and was given permission to revise and extend her 
remarks.)
  Ms. WOOLSEY. Mr. Speaker, I thank the gentleman for yielding time to 
me.
  Mr. Speaker, H.R. 2269 is a prime example of how a good idea can be 
turned into a bad bill. It is a good idea to make investment advice 
available to employees at their workplace. Of course it is a good idea. 
But allowing self-interested advisors, those who could benefit from the 
advice they give, in the workplace is not a good idea; it is an 
extremely bad idea. But that is exactly what H.R. 2269 does.
  Please remember why ERISA was enacted in the first place. It was 
enacted to protect workers from abuses related to their benefits. So 
ERISA now prohibits investment advisors from coming to a workplace and 
providing employees with investment advice if there is any reason to 
think that the advisor might benefit from recommending one investment 
or another.
  ERISA was enacted to protect workers from abuses related to their 
benefits, and this protection has worked for over 25 years. But with 
H.R. 2269, we are saying that it is okay to have investment sales folks 
at the workplace under the guise of the employer's endorsement 
providing investment advice to their employees.
  Think about this: We have employees with 401(k) plans, many of whom 
have little or no knowledge of high finance. The employer brings an 
investment advisor to the workplace. That has to appear as if the 
employer endorses whatever this advisor is selling. Members cannot tell 
me that most employees will not be strongly inclined to accept the 
investment advice given them under those circumstances.
  If the advice is poor or, heaven forbid, the advice is downright 
wrong, or if it is some kind of scam in the short run, there is no 
protection for that employee.
  There is hope, however. Fortunately, we have a substitute to H.R. 
2269. That is the Andrews substitute. The Andrews substitute keeps the 
good idea of making investment advice available to employees in the 
workplace, but it builds on the protections in current law that 
employees need and must have and must be able to depend on.
  The Andrews substitute is a win-win for employees, and I urge my 
colleagues to vote against H.R. 2269 unless the substitute is included.

                          ____________________