The Department of Labor’s proposed fiduciary rule presents complex challenges to advisers and their clients and will exacerbate the savings crisis in America, Juli McNeely, president of the National Association of Insurance and Financial Advisors, warned Congress.

Testifying Thursday before the House subcommittees on Oversight and Investigations and Capital Markets and Government Sponsored Enterprises, McNeely said NAIFA remains concerned about the negative consequences that the rule, as drafted, would have on middle income retirement savers and appealed to members of Congress to urge the DOL to re-propose the rule if the department intends to proceed with the rule-making process.

Two weeks before the comment period on the controversial rule closes, she said the proposed rule would lead to less access to more expensive advice.

See also: “Does the DOL’s fiduciary rule favor fee-based brokers?

“Simply put, American investors need more personalized assistance and more options with respect to retirement planning and saving, not less. Unfortunately, the Department’s proposed rule, along with its proposed amendments to existing prohibited transaction exemptions (PTEs), threatens to be counterproductive with respect to this country’s retirement crisis by making it both more expensive and harder, not easier, to provide investors — particularly those who need it most — with the services and products that could help them live independently during their retirement,” she testified.

During an August string of DOL hearings about the proposed fiduciary rule, McNeely said the cost to comply with the proposed rule would be significant for advisers, and cautioned that whenever costs are incurred “advisers have to pass them on to their clients in some way.”

As drafted, McNeely told Congress Thursday, the proposed rule and proposed PTE amendments “will result in less retirement education and services for small businesses and individuals with low-dollar accounts.”

First, she said, “faced with a multitude of new fiduciary obligations, which entail substantial cost and administrative burdens, brand new business models and fee structures, as well as increased litigation exposure, some advisers may no longer offer services to small plans or individuals with small accounts.”

Second, given the proposed rule’s “restrictive definition of investment ‘education,’ advisers who do not wish to trigger fiduciary status will no longer be able to provide any meaningful education to their clients,” she added.

“Third, even when an adviser is willing to serve in a fiduciary capacity, unsophisticated investors and low-income clients will be reluctant to sign complicated, lengthy contracts (as required under the Best Interest Contract Exemption for fiduciary advice to retail investors) and unwilling or unable to pay upfront out-of-pocket fees, and thus will forego advisory services,” she testified.

See also: “Advisers fear BIC exemption will impede small-business access to retirement plans

A NAIFA survey found that two-thirds of advisers anticipate the DOL’s proposal will result in the loss of clients because they believe clients will be intimidated or unwilling to sign the contract required under the proposal, and because the proposal’s burdensome requirements would make it impossible for advisers to continue to serve small or medium-size accounts.

Finally, she said, “the proposal could result in some advisers exiting the market entirely, which for some rural communities, could result in a complete void of professional financial services.”

The comment period for the DOL’s conflict of interest rule ends Sep. 24, 2015.

See also: “Full coverage of the Department of Labor’s fiduciary hearings

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