constructive conversations i've had with so many industry stakeholders. as i said in my system, there has been an undeniable shift towards a recognition for the need of the best interests standards. nos who are, perhaps in darchbt place, they tell me that they would like to think that they put their clients' best interests first now. and my response to that is then there's good news for you. this will be easy to comply with if you are, in fact, putting your customer's best interests first. i think it is something that can be done. i hear from so many folks who are playing in this space day in and day out. we need a level playing field because people go to their adviser and -- actually, there are some advisers that are dual headed depending on what part of the transaction it is, sometimes they're a fiduciary,

sometimes they are not. it's already confusing to begin with. we need one standard and it ought to be the best interest. >> i love the one standard. i love the best interest tests. i assume there are a lot of people who are making a lot of money. so i've got to see, this one seems like a no-brainer to me. hard working americans who manage money for their retirement should be able to trust that their retirement advisers are looking out for them. and besides that the thousands of honest hard working advisers and brokers around this country who already put their clients first every day shouldn't have to compete against those unethical advisers who don't. i understand why we're in this fight. i understand there are people who are making money for keeping this game rigged, but we don't work for them. time to level the playing field. thank you mr. secretary. thank you mr. chairman. >> i want to introduce senator kasich who will be brief within

thinks five minutes and i think we'll have enough time to hear from everybody. senator cassidy. >> good afternoon, sir. >> hey, senator. >> good to see you again. i don't pretend to understand this as you do. let me channel that as people have asked me of. a fellow came and said, listen, i have a client. he's pretty well off. i go into his office help him with his financial planning and he says, do you mind speaking to my employees and giving them general advice about how to handle my money? he goes i do it as a favor to my client. but i think under this rule, i'd have to have each of those employees sign a contract before i would be able to give them the advice i'm giving them. is that true or not? i don't know. i'm asking. >> i don't think that's true for the following reason. if you're sitting there workers what is your risk talent here is what you need to think about, workers to have a

healthy retirement if you're married what's your wife's husband's -- >> i think you may have gotten to nubbin of where i was. you don't think think or you know not? >> well one need to give me more facts, senator. >> and i'm saying this just because if he -- unless he has clarity from d.o.l., he won't have clarity in terms of how to conduct himself. les, okay, i want you to sit here and i will say this is what you should do with your money. if you're younger, put knit this. if you're older, put it in that. first you have to figure out your risk tolerance, etcetera. thank you, i hope you're all well. >> general advice that is not go pick this product or that product, but go into mutual funds, go into index funds, go into something like that that is ves in the area of education or asset allocation. that wouldn't cross the line of

education. >> sounds great. next, i am told that united kingdom put in laws similar to this in 2013 and that banks stopped offered investment advice to customers with less than 80k in assets. now, it may be that the answer to senator warren's question is that this model works for lower and moderate income people. so just comment on that. again, i don't know whether it's true or not. >> it's not true. let me give you the facts. after the uk put in place their regulation -- by the way, their regulation bans commissions. we don't ban commissions. there were advisers dropped 310,000 clients and 820,000 new clients came into the market. so there was a net delta increase after their regulation of over $500,000. investors with low talent accounts continued to be serve.

and i traveled there permanently to meet with them because i heard that feedback a lot. the most interesting point about what happened in the uk senator, is that more and more people are now getting in lower costs funds. because the problem with our system in the u.s., is it incertaintyivizes complexity when complicity is all too frequently what is called for. and it incentivizes complexity because complexity generates more fees. so the uk experience, i welcome further inquiry into it because there has been a fair amount of incorrect information surrounding it. >> and the d.o.l. is estimating the costs over the years and i'm given other numbers that say it could exceed $15 billion. any thoughts on that

discrepancy? >> i think our cost benefit analysis is quite strong. we estimate the benefit over the next ten years to be $40 billion. in a 11 trillion dollar market the cost of confliktd advice when you have a $50 thousand loss, in an $11 trillion market it adds up fast. and these are folks who are ill afford to lose this. the benefit i'm hearing from employers like one of our next panelists has been that market forces are working to the vank advance advantage of small investors. i hope you'll talk to some of these folks who are already fiduciary in doing great work. >> i yield back. thank you. >> one of our members is grossly late, but he's my dear friend. his staffer has been doing a good job of convincing me he has two worth of questions.

is that true? >> i am fully convinced, we have four or people to testify before the votes. i recognize sheldon white house cobb be brief. >> i have heard from companies who are major providers of services to investors who are totally on board with the notion that they should have the responsibility of mouth the fiduciary standard, but are concerned that around the edges the ways in which they communicate with vast numbers of customers, that might be affected by this probably in ways that none of us would intend. and i just want to make sure that you will be attentive to make sure there's not too much regular la the other sprawl in areas outside of what we all expect, which is to keep them putting the interest of the client first. >> absolutely. and we had that conversation earlier and we certainly had a

number of very constructive meetings with firms who have addressed concerns similar to that. again, our question we always ask is show us in the proposal where you think that concern arises and give us some potential solutions for that so that we can contemplate how to make sure that we're getting to the right place. >> very good. thank you very much. and i'm well within my two minutes, mr. chairman. >> let the record reflect that sheldon whitelouse was brief. >> you don't to make it sound like that's a novelty. >> it was refreshing. >> mr. chairman thank you for your courtesy. it was a pleasure to be with us. >> will the second panelists please come forward.

>> n interest of time, i'll begin with the introductions so we can get straight to their testimony. first, peter snyder, president of a grnlg company which i visited before. thank you for being here peter. peter is the leader of financial services providing income retirement savings options and insurance to millions of americans. mr. sflieder became president and served before that as the executive vice president for primerica. we welcome you here today. >> thank you. >> we have some scott purit managing contractor of defiance i.r.a. in maryland. he is a retirement director.

a masters degree from harvard university. welcome and thank you for being here. at this time, i'd like to turn it over to the rank and member frank and introduce ms. miller. >> thank you mr. chairman. it's my pleasure to introduce darlene miller who is joining us today from my home state. ms. miller is the president and ceo of permac industries in burnsville minnesota, a manufacturing company that provides precision small part machines to other industries. permac was named the u.s. chamber small business of the year in 2008 and in 2010 ms. miller herself was named by the burnsville chamber of commerce as the business person of the year. i've had the good fortune of meeting ms. miller in 2012 when we toured burnsville senior high school together to discuss the importance of s.t.e.m. education.

ms. miller, thank you for being with us today to discuss how you can best meet the needs of your employees. >> thank you mr. chairman. growing up in wichita, bob has become a notable figure in the economics community. he brings a balance perspective on this issue and he has been an xrve and private public and government sectors. his list of accomplishments, employment and memberships on advisory boards reads more like a collection of several highly accomplished people rather than one man. i thank you for taking the time to come before this committee

today to provide a vice president that unfortunately seems to be lost, if not solely ignored in this conversation. we hope you can offer us some solutions on how webb offer those benefits in regards to financial retirement and riempt living. >> if all the panelists would limit comments to five minutes. >> thank you very much mr. chairman. and thank you also senator robins for that fine introduction. >> turn your mike on. it's that switch there. >> so i'm thanking everybody again for their kind introductiones and so forth okay? and senator roberts, i don't want you to choke on these words, but i'm a lifelong democrat and a former clinton administration official.

>> well that doesn't bother me one [ expletive ] bit. >> okay. but i say that because i come from a background where i was in administration where we care deeply about the kind of goals that the department is pursuing in this proposal, but i want to respectfully disagree with the way the proposal has been outlined. and i'm going to make three quick points. number one, the correctly estimated benefit of labor's proposed rule do not outweigh the costs. this is because labor gives absolutely no credit or assigns no value to human investment advice. namely encouraging clients to avoid trying to time the market. one of the worst decisions a long-term investors can make. and also helping clients rebalance their portfolios over time. when these factors were taken to account, my colleagues and i come to the conclusion that rather than generating $4

billion in annual benefits for investors, it would produce net harm of roughly $1 billion to $3 billion annually depending on how many brokers are induced by the proposal to no longer serve the i.r.a. future market. in fact, during a future down turn, dr. singer and i estimate that by causing many current accounts to be uneconomic to serve, the rule cocost investors as much as $80 billion, double the ten-year benefit estimates claimed by d.o.l. i should also mention this connection, that the $17 billion number that's been thrown about by the cea estimate in our opinion, is flawed. it's base odd a flawed reading of the academic studies and we show this in our report. in fact, not even labor counts on the $17 billion. they only use a $4 billion figure. and even that figure, we point out, is incorrect.

that's just important to keep in mind. now, word about robo advice because i know it's coming up. i think it's an important addition to the market. i think we have to be careful about drawing too much of a conclusion from online or text messaging. while robo advisers can several help identify asset allocations or products to consider, an e-mail or text message during a market route is not an adequate substitute for a human being on the other end of the telephone reminding investors of the clear evidence that it pays to stay put if you're a long-term investor, which by definition retirement savers are. number two, my second point if you lose your broker, the only other source of human advice you're likely to go to is somebody who is providing advice on a basis of a fee which is the percentage of your account. we show in our account that investors choose that option they'll end up paying more than they do under the current

regime. this is for small investors. by the way i want to underscore something about small investors. secretary perez started his testimony talking about ads 506,000 account. that is not a small saver account. there are millions of people here, and i think senator warren pointed this out, there are tons of people that have account balances of $10,000 or $20,000 and that's all they've got. for those people, brokerage is a less expensive forum of advice than a r.a.p. fee. that is a if you will fundamental fact. third, and my last point, the notion that all retirement investment advisers should be held to a best interest of client standard is not controversial. so let's just stipulate that as far as i'm concerned. it's the way we enforce it. should we endors force it by potentially a class action litigation or by a body that we have established to oversee the brokerage industry? in fact, my bottom line suggestion to cut to the chase

for d.o.l. is what they ought to do is go back to the drawing board and go to fenra and they've offered comments saying the rules are workable and, in fact, a lot of broke remembers going to leave the market. what labor ought to do is go back and figure out a way to administer a best interest rule that you could enforce. and, by the way, if the problem is insufficient disclosure about who is getting paid and how they're getting paid there is a simple solution to that. simple exposure. just put a great big bold warning on the front of the document that says who is getting paid and how much. the only basis -- and then i'll conclude, mr. chairman. the only basis for rejecting that idea of disclosure was one study that the department cited that is based on experimental evidence not on real world market evidence. i'm telling you, if i was in the government and i propose to my superior or secretary, whoever it is, that we ought to completely up end an entire

industry on the basis of experimental study, i probably would have been told to go back to my office and find another job. so there is absolutely no basis, in my opinion, for at least at a minimum not trying better disclosure. before we go ahead with this massive undertaking. and so i think that concludes my testimony. thank you very much. mr. chairman, ranking chairman and members of the subcommittee i appreciate being here today. please allow me to tell but primerica. we were founded almost 40 years ago on a central mission. that middle income families require someone to help them focus on their financial needs. that was true then and it's just as true today. and we feel like at primerica we've made some headway.

we ensure 4 million lives with our term life insurance. this year we will pay $1.2 billion in death benefits to families. those checks which we deliver every day and we'll deliver multiple checks today keep a personal tragedy from becoming a financial one. we've helped our clients save almost $50 billion in our investment accounts. most of our accounts are very small, by industry standards, but they're hugely important to the families who open them. investment choices with us are very simple. and appropriate for our market. we do no individual stocks, do no options no commodities. mainly mutual fund and annuities. you can't buy google from us, but you can buy 700 mutual funds from top companies bylike invesco and lake me sa.

our clients' household income is between 30 and $100,000 a year. there's usually two parents working in those homes and, frankly, all too often the homes are headed by a single mother. we strongly believe in retirement savings and our clients have opened 1.2 million i.r.a.s with us. you can start with one primerica for as little as $50 a month. but even that amount is hard to find in the families that live paycheck to paycheck. what we sometimes say is they have too much month at the end of the money. we provide face-to-face help from licensed representatives who live and work in the communities. these representatives begin with education. they teach the fundamentals of how money works. dollar cost averaging time in the market emergency cash accounts. that's all important.

and oliver wyman study just released found it advised individuals accumulate 38% more assets than the nonadvised and at 865, they have 114% more. our clients benefit from our presence in their financial lives. comment letter was submitted by shelly rosen, one of our reps. 15 years ago, she sat dunn with a railroad worker and his wife. they had a lot of debt and no savings. and they were very generous. so generous that they ran up debt on credit cards buying gifts for their friends. we helped them teach them other way toes gep be generous. today they're debt free and fmly independent. the department of labor rules will stop shelly rosen from helping folks like that railroad engineer. the proposal subjects our client interactions to the prohibited transaction rules in erisa in the irs code which effectively

make the brokerage model chosen by 98% of accounts under $25,000 illegal. the department tried to write an exemption in the best contract exemption, but it's so complex, so onerous, so costly, it's unworkable. they attempted to make it principal based but instead introduced uncertainty which makes the exemption unusable in a word of erisa where there's strict liability. no firm we know of intends to use it. that makes this rule more punishing than the one that was withdrawn in 2011. prior testimony, the department of labor suggested these robo advisers will fill the gap and help the millions stranded by the rule. we disagree. our company believes in biorhythms, not algorhythms. they need a person not a

personal computer to navigate a financial landscape unfamiliar to them. they worry about a mistake and they won't hit the send button. in the households we serve there is a struggle going on. it's not between investment a, b or c. it's a fight between savings and spending. a fight to put an extra $50 away. we all agree we must act in a client's best interest. but inadequate retirement savings is the overriding issue facing the middle class and this rule is another obstacle. don't doubt the d.o.l.'s good intentions, but it's such an important issue, everyone needs to be involved. and we look forward to working with everyone and we're glad the senate is involved with this issue. thank you very much for listening to me. >> thank you. ms. miller. >> thank you, chairman isaacson and ranking member franken and thank you for the kind introduction. members of the subcommittee on

employment and workplace safety and members of the full committee. i am here representing myself and my employees and also the chamber of commerce of which i am a board member and i chair the u.s. chamber small business consults. permac opened in 1966 and i purchased it in 1993 and '94. i started with seven employees. we now have almost 30 and we're looking to expand. in order to expand my company must be able to compete with much larger companies for talented employees. and one way we're able to do so is by offering employee benefits including a retirement savings plan. and as an owner of a business, i am very focused on the details of my core business function and i use outside professionals to help me with supplemental business functions. for example, i use a cpa to assist me with tax issues and attorneys assist me with legal issues and a financial adviser to help me with my retirement

savings plan. and in 1999, permac implemented a sarsep now known as a sepi.r.a. the plan was recommended to me by an adviser who i had worked with previously to provide medical benefits for my employees. and several years later, my adviser advised me that i was in danger of violating the 25 employee limit for a sarsep. so at that point i worked with limb to determine how to continue to provide retirement benefits for my employees. we decided a 401(k) plan was the best option for my company and in 2008, we implemented that plan. we have a 96% enrollment rate in our plan. almost all of our employees participate in that plan. of the eligible ones there's only one who is close to retirement who does not participate or a couple that are

part-time are not quite yet eligible. under the 401(k) plan, employees receive a matching contribution equal to 100% of their first 3%. that they contribute and 50% of the next 2% of contributions. also and just as important is permac provides substantial investment education to all of its employees. i look forward to continuing to provide competitive benefits. my current employees are like family to me and i want to be able to help them, especially with the retirement. just as importantly, i wanted to be able to attract new employees. 82% of our association p.m./p.a. precision machine products association say that they also need to be able to provide this benefit to their prospective new employees. i am very concerned that the proposed rule will impact our ability to do so. last week, the chamber submitted

a comment letter to the department of labor enumerating many ways in which the proposed rule is unworkable. in my testimony i'd like to highlight three issues that will have a particularly negative impact in small business plans. first, the seller's carve out discriminates against small businesses and will decrease access to much needed guidance. under the proposal, there sa carve out for the advisers that are selling or marketing materials. however, that carve out does not apply to advisers to small businesses. the do.l. seems to believe that small business owners, such as myself, are not as sophisticated as large businesses and, therefore, need additional protection. when i work with my financial adviser, i am aware that he is providing a service for a fee and sell a product. i wouldn't be able to run a successful business if i was not able to understand when i'm involved in a sales discussion.

second the changes to the education carve out will restrict access to investment education for both small business owners and their employees. my employees really, truly value the investment education provided to them specifically providing investment recommendation and various asset classes. this information allows them to make informed investment decisions and many of my employees could not afford to pay for this investment education separately and might be discouraged from investing in the plan at all if my company did not provide this benefit. and third, the best interest contract exemption will increase the cost of services to small businesses. and possibly eliminate access. there's some question about whether advisers to small business plans are even able to use the exemption.

even assuming that they are, there are certain to be additional costs associated with these changes. as a business owner who relies on outside professionals to help me manage my plan any additional costs imposed by the regulation will be pass theed on to me. in conclusion, i'm very concerned that the proposal will not achieve the department's goals of better protecting workers and retirees but will, instead, make it harder for small business employers and employees to access financial advise and increase retirement services. thank you for the opportunity to testify before you today. and i look forward to any questions you might have. >> thank you ms. miller. before we move, i want to apologize. senator roberts and i both have a committee hearing which involves nobody on the did i as, i might add. >> shoot. >> we have the be there. shoeg i'm going to turn over the rest of the hearing to our

athing chairman but ranking member al franken. >> good grief. >> unprecedented. >> good grief. >> mr. acting chairman, i don't know what to say. you again. may i help you? >> okay. just go right to mr. keerns. >> the department of labor's proposed conflict of interest rules. i'm scott puritz, co-founder and managing director of rebalance i.r.a. my firm is a registered investment adviser with approximately $275 million with assets under management and we serve approximately 500 clients. we lal i.r.a. as is a relatively new national advisement investor

firm that provides real human beings with low cost highly diversified portfolios for everyday americans. investment committee at the yale endowment and the billion dollar corporate pension fund. rebalance i.r.a. embraces a fiduciary legal standard and we always put the interests of our clients front and center. this new generation of firms is offering retirement investment advises to clients at all income levels for modest fees. a group of innovators provide firms such as my own, but also

includes established industry players such as vanguard and schwab. this trend of retooling the financial service industry is about three years old and has met with considerable success in the marketplace. tens of thousands of clients have switched over. this group of investment innovationers is growing very fast and manages over $15 billion in plan assets. imagine what would happen if there was a level playing field. imagine. these investment innovators have three common features. first, we harness technology to make the process more efficient. second we harness new investment models and typically the best of three proven endowment style investing portfolios of low cost efs.

a rebalance i.r.a. the plans seek our help because they need advice about how to manage their retirement savings and how to better understand the increasingly complex world of investment products. our clients come from all walks of life, nurses, school teachers plumbers lawyers, welders, professors police, firemen, government employees regular americans. we're in the marketplace every day dealing with everyday americans as they struggle to find the best way to manage their retirement investment savings. if you will we see how the sausage is made. and sometimes sometimes, frequently, it is not a pretty sight. over 30% of our clients come to us directly from having, for lack of a better phrase, a sub optimal relationship with a brokerage firm. the story we see over and over again is all too familiar. a client at a brokerage firm who

is stunned to find out that their so-called trusted retirement investment adviser does not have a fiduciary responsibility. in addition, the vast majority of clients are surprised, shocked, to discover that there is almost always a second layer of fees at the investment management level which frequently adds 1% or more to the fee burden. the brokerage refugees that we see at our firm average 2..37% of fees, all in, per year. now, that may not sound like a lot of money but over several decades, that extra fee burden can eat away at over half half of a consumer's retirement nest egg, over half. one rebalance i.r.a. takes on these refugees as clients of our firm, we immediately reduce the investment fees rupture by an average of 8%. in addition, we put together a comprehensive retirement plan and provide our clients with best of breed endowment style,

retirement investment portfolios and finally, we pair all of our clients with a highly qualified two-person real heartbeat retirement investing team. american inventiveness and the entrepreneurial spirit are alive and well in the financial services industry. but for all consumers to reap the full benefit of this extraordinary, truly extraordinary surge of innovation who needs to be three things. greater transparency, greater flow of information, particularly regarding costs and a greater alignment of economic interests. the financial services industry and provide everyday americans with a fundamentally cheaper and fundamentally better way to save for retirement. it's time to hold all financial professionals accountable by consistently requiring them to

act. and establish a level playing field. americans struggling to save for a dignified retirement should no longer be subjected to the conflicts of interest and if the traditional brokerage firms cannot live by a simple fiduciary standard and conserve moderate savers, so be it. other firms who embrace the client first approach -- >> mr. puris i would ask you to wrap up the. >> all income levels to prepare for a secure retirement. thank you. >> thank you. >> i will be here until the end, so i will go to senator warren.

according to the best available data data that are not paid for by the industry, this costs americans about $17 billion a year. the department of labor has proposed a rule that would put a stop to this retirement savings drain drain drain. the department of labor's rule and i think these are your words, complex and burdensome. and you said that one thing that is, quote, critical to your success is that primerica always operates in its clients best interest. i was interested to read a news report this morning that outlines lawsuits brought against your vis advisers in florida. according to the article, at least 238 firefighters teachers and other career

public workers who were near retirement age accused your company of providing bad advice that drained their retirement savings. and you did it by advising them to move their retirement savings as a guaranteed pension into private investments. now, primerica was poised to make a lot of money but only if you could convince florida firefighters who are near retirement age to cash out their guaranteed pensions. so, mr. snyder i just want to understand your company's advice in these cases. do you believe that people like these firefighters from florida who are near retirement and have secure pensions with guaranteed monthly payments should move their money into riskier assets with no guarantees just before they retire? >> first of all senator warren, i appreciate the promotion.

i'm actually the president of the company, not the ceo. >> okay. >> and i'm familiar with the matter of which you speak. and it doesn't have any application to the rule before the committee because in that particular case, none of those individuals were clients of primerica. >> whoa, whoa. >> they paid us no compensation. >> wait, wait. let's stop right there, mr. snyder. the article didn't say the workers were your retirement clients. it says you gave them bad advice. and here exactly is the quote. once these workers retired and moved out of their government plans, primerica agents stood to profit from managing their retirement assets. had they stayed in the pension programs retirees would have simply collected their monthly payments, leaving nothing for primerica to manage and no commissions for primerica agents to harvest. now, my question is not how you were paid. my question is whether you think

it is sound investment advice to encourage public employees to move their money out of their pengs and into riskier assets with no guarantees just before they retire. >> senator in that particular matter regulators looked at that and found the firm acted properly and -- >> stop right there. the question is not about regulators. the question is is it legal to do that and that's exactly the problem we've got. it is legal to do that. and i think that's what the regulators say. it's legal. my question, once again is about the advice that primerica agents gave. is it a good idea for firefighters on the front edge of retirement to move out of a guaranteed benefit plan that was going to cover them for all their lives and move into a risky investment that would make a lot of fees for your agents?

>> you know, each situation is really very different. if you were in a defined benefit plan and you're sick, what happens is in the state of there are, for example were you to retire and then die two or three weeks later you would no ability to leave your money to your loved ones. so it's very -- >> i'm sorry are you suggesting that these 238 people were weeks away from dying and that's why they all got this advice? >> well senator, this -- the courts dismissed those cases and, frankly, this illustrates one of problems -- >> because it's not illegal activity. i think we've established that, mr. snyder, that no one broke the law. the question is whether the law should be changed. >> it illustrates one of the issues with the rule because we're here to talk about the rule. one problem with the rule is as a everyone in the financial services industry knows, especially after the financial crisis, you can be sued, sometimes appropriately but also sometimes frivolously.

and under the best interest contract exemption, you've entered into a contract with the client and they can sue you and you can lose the benefit of the exemption. so you -- not just -- >> i understand, mr. snyder, that zorpt toyou don't want to be sued. i totally get that. but the question i keep trying to ask is whether it's generally a good idea for workers like firefighters and teachers on the eve of their retirement to move their money from guaranteed defined benefit plans into riskier assets. let me ask you that question, mr. puritz. you're the managing director of rebalance i.r.a. you have a large investment firm. would you advise 50-year-old, 60-year-old clients to cash out of a defined benefit pension plan and move money into an i.r.a. managed by your company? >> as a general rule, the answer is no. >> okay. so you'd say no. why not? >> in a traditional pension, a

defined benefit plan there is safety and predictability. my answer would be different if it was a defined contribution plan. >> that's not what we have here. we have a defined benefit plan that guarantees that these people are going to be covered for their entire lives. is that right? so there's a lot of research around this, i understand. are there circumstances in which it is a good idea for someone right on the threshold of retirement to move from a defined benefit plan that will protect them for the rest of their lives to a much riskier plan? >> there are circumstances but they're very rare. >> oh you -- so you would describe them as very rare. i'm going to say, i took a look at the research on this and wanted to get more expert opinion on this, and it seems to me the research is pretty clear. alicia menell from boston college said, and i'll quote her, only those with serious illnesses who believe they do

not have much time left should even consider cashing out a defined benefit pension and even that isn't obvious because as she puts it even sick people may live longer than they think. so mr. puritz, let me ask you one more question. do you think it is -- and i want to use the correct quote here -- complex and burdensome to offer advice that is in the best interests of the client as primerica claims? i didn't think so. so, frankly, the suggestion that it's too expensive to provide people with sound financial advice is ridiculous. millions of financial advisers do it every day. hard working americans like the florida firefighters and teachers who devoted their careers to protecting the public and who were targeted by primerica shouldn't have to worry about whether their financial advisers are planning to get risk by playing roulette with their commerce' retirement

savings. the department of labor is working to fix its problem. thank you, mr. chairman. >> thank you, senator. mr. puritz in both your spoken testimony and your written testimony, you refer to something called a brokerage refugee. i think that someone who fled a brokerage and had a bad experience, i guess, right? okay. it was mentioned in your written testimony testimony, i was recommended by a broker she inherited from her family. how do the services you provide and the fees you charge under your duty as a foo do you

rememberary differ from those that this woman experienced with her ip hearted broker? what does that mean for retirement investors nest egg? or their ability to retire after after. >> she literally means raising the microphone to your lips or to your mouth -- not to your lips, but -- >> how is that? >> you can turn the light on. >> push the button. >> thank you. >> there you go. >> there we go. >> senator, thank you. that's an excellent question and really gets to the heart of this matter from an economic point of view, from a return point of view. and the example that we cited with a client, we're talking

about an extra fee burden. charlie ellis, who is a member of our investment committee, has a phrase, he says the dirtiest word in finance is only 1%. we think of 1% as what's the big deal? we paid 15% for tips, 20% if you're generous. 1% sooens seems inconsequential. but in the scenario that we run into consistently with clients who come from brokerage relationships, that extra fee burden is 2.73%. and if you trend line that out over 30 years that's additional or that's what they're paying? >> that's what they're paying per year. >> in the current environment with plenty of lower comfort alternatives it's really unnecessary fee burden. >> and is that compounded? >> they compound exactly like the return. and over time, the -- give you an example. the someone had $100,000 and

they ran an all growth stock which historically is returned our magic number is 7.2% a year. is that number in a tax deferred account, that account would double every ten years. so in the 30-year time frame, it becomes $800,000. a considerable wealth creation. by contrast if you reduce that down to 5%, which is really the fee delta that we see in the marketplace marketplace, it's for half the amount of money. it's a doubling of the return. >> okay. so how are you able to provide your service at such a lower -- my come pewtations 32% of 2.37% is about 0.75%. >> that's correct. >> how do you do that? >> we use technology to make

everything productive. it's low cost etf index funds. >> is that what was called disparageagingly robo? >> robo is a phrase for a new generation of investment advisers who use technology. now, there are some advisers who are 100% computerized and that's where the term robo comes from. and they are -- there's some very successful ones that is the market leader and they're targeting millennials and people in their 20s and 30s for whom they're familiar with working. >> they're familiar with computers. their retirement is a relatively small part of their overall looifr. their whole career is ahead of them. by contrast there's other firms such as personal capital and my own firm rebalance i.r.a. where we have similar investment philosophies and similar use of

tenl technology, but we have real life investment advisers who deal extensively with clients and match them with the right asset allocation, low cost underlie ing underlying portfolios and discipline managing. did that answer your question? >> i have a lot of questions, but we'll submit them for the record and we will keep this open. i didn't come here thinking i would adjourn this so when i say we'll keep it open for a certain period of time, and i imagine -- is that ten days, anybody? ten business days. i was right. i was in the majority at one point. so thank you all for your testimony and this hearing is adjourned. >> investment a. officials warn this week that it may have to close some of its hospitals in

august if congress fails to address the current budget shortfall. veterans affairs secretary bob mcdonald will testify before the house veterans' affairs committee about the v.a. budget. live coverage starts at 10:00 a.m. eastern time here on c-span3 c-span3. later in the day, a house communications and technology subcommittee will look at broadband infrastructure investment in the u.s. we'll hear from former s.e.c. commissioner jonathan adelsteen and google fiber cities director michael singer. live coverage begins at 12:30 eastern. an artist who took up china painting and carried the interest to the white house, establishing its china collection. she was interested in women's issues and helped raise funds for johns hopkins university on the condition that it admit

women. and she was the first president general of the daughters of the american revolution until she died in the white house from tuberculosis. caroline harrison, this sunday night on c-span's original series, first ladies examining the public and private lives of the women who filled the image of first lady from martha washington to michelle obama. sundays at 8:00 p.m. eastern on american history tv on c-span3. up next with a conversation on islamic extremism in the middle east and around the world. we'll hear from the author of temptations of power, islamists and liberal democracy in a new middle east. the american enterprise institute hosted this event. >> good morning, folks. we have a full agenda so even though not everybody is here, we're going to just allow people to filter in and start our

conversation. good morning, everybody. i am donnie plekae at aei. i'm delighted that we're doing this conference. the title is islamic extremist, reformist and the war on terror. but that doesn't begin to cover the conversation we're hoping to have. the prove nance of this event is an interesting one. michael rubin and i were sitting in our office talking about issues and the challenges that we face in foreign policy and domestic policy. and we have both been struck by the skasty of these issues. the policy combinations have been dominated by people on one side, neither of whom i believe represent the mainstream of thought or frankly, suggest reasonable or good policy options for how to deal with

straumist streamism in the middle east and the threat that it poses domestically. there are real issues to talk about whether they are here within islam whether they're u.s. policy and so that's the conversation that we really hope to have. we're looking to shed light and that's one of the things that the american enterprise institute does best. i hope you'll join us in being part of that. i'm not going to introduce the panels. they're roughly divided up. we're going to talk about some of the issues in the region and some of the religious questions in our first panel and then we're going to talk about policy options in the second panel. but as usual, everybody is going to talk about what they want. the one thing that i want to remind everybody is that what we will have a chance for q&a the way we do our panels is in a much more informal way. we're not asking everybody to give a presentation up front. even though we're sooi seated

behind a did i as because we can't figure out how to put the chairs in the right place, this is intended to be more of a lively conversation than it is series of lectures. if you have any comments afterwards, let me know and let me turn things over to michael rubin. thank you all for being here. >> thank you very much danny. i'd like to introduce the first panel and then we can get right into it. i'm thrilled to be on a panel with three friends. jennifer brice and i went to college together. we continued studying together in yemen, although jennifer had a far more advanced level than i was. she has since worked in guantanamo bay and most recently, she's been at the zefer institute, which is right nearby stanford university and jennifer is one of the experts i think, with issues relating to

internal reform. next to jennifer is shadi hamid who i oftentimes have to debate on the diane reems show. shodi is one of washington's leading experts on the muslim brotherhood and is thought very very deeply about issues of reform, issues of extremism what is extremism and so forth. so i welcome him. and, of course shodi is at brookings institution just up the street and soon to be nern enterprise institute's in a minute neighbor. abas is a native of iraq. he's one of the best connected americans to the internal religious debates inside nedjef. at the same time, abbas has --

while he is a senior fellow at johns hopkins, he is founded in washington indispensable institute for shiite studies. i want to start with a basic question. we often talk about how straum needs a reform. what exactly is a reform in the -- what is reformism is in the islamic context? >> i'd like to start by rejecting the concept of reform. i don't find it helpful. i find language of revival, renewal, and development more helpful and let's look very recently at the chattanooga shooter. his problem was he was disconnected from the very rich and complex tradition of islam.

>> so i don't like to -- i don't like a different word. you don't like reform and i don't like reformation. i feel like this word, we have been hearing more and more of it and there's a "new york times" best seller that has that word prominently in the subtitle. so i mean, part of the problem there is this idea that we can apply concepts that were specific to christianity and its evolution to a different religion, islam. and this idea that we almost assume, like there's this liberal determinism that all societies, cultures and peoples will ultimately end up at the same endpoint, the end of history, if you will, it's a matter of how long it takes and how to get there along the way. in a way it's sort of paternal paternalistic and patronizing. why should muslims necessarily -- you know there

was that big debate that i'm sure a lot of you saw with bill marr and ben affleck. i think a lot of us were -- maybe not, i don't know but a lot of us were cheering on ben affleck. but when you looked at the substance of what he was saying it was problematic even though that must have been our instinctual feel to say, oh, good. he was essentially saying we all want the same things, that muslims want to eat sandwiches, too. and he actually said that eating sandwiches as if -- and, you know we all want to raise kids and have good jobs and all of that, which is all fine, but you can want to eat a sandwich, but still believe that islamic law should be central in public life. you can want to eat sandwiches and believe that the punishment should be implemented. and that's where i think it becomes challenging. but anyway, the point there is that it may be that islam -- and i'll just put this out there and we can get back to it. what if islam is uniquely

resistant to secularzation? then what? >> i'm going to push back on one question, actually and ask you for clarification. when you see huda punishments, for the wider audience -- >> the hadud punishments would include stoning adulterers cutting off the hands of thieves.