U.S. Reps. Andy Barr (R-KY) and Rick Allen (R-GA) introduced legislation that would mandate that only financial factors are to be taken into account by advisors when making investment decisions for retirement plan investors.
Specifically, the Ensuring Sound Guidance (ESG) Act, says the “best interest of a customer shall be determined using only pecuniary factors unless the customer specifically requests that non-pecuniary factors be considered.” It is intended to prohibit asset managers from prioritizing environmental or social goals instead of returns.
“Asset managers should be in the business of maximizing returns for investors, not pushing their own political agenda at the expense of everyday Americans. Our bill protects average Americans saving and building wealth through retirement plans. It also preserves access to capital for energy producers to ensure costs won’t skyrocket further for Americans at the pump during a time when gas prices are at a historic high,” Barr, who serves on the House Financial Services Committee, said.
The bill also says that investors are allowed to allocate their capital in ways that may not prioritize returns if they choose to do so.
“Americans trust their financial advisors to invest their hard-earned money in a way that maximizes returns, but more and more of the ‘woke’ left are forcing their climate agenda on middle-class families by pushing clients to invest in green funds or other politically charged goals. At a time when prices for everything continue to surge, the Ensuring Sound Guidance Act will make sure advisors prioritize maximizing returns and empower plan participants to choose how they invest their capital,” Allen, ranking member on the Health, Employment, Labor and Pensions Subcommittee on the House Education and Labor Committee, said.