Rep. Jim Banks, R-Ind., has introduced legislation, the Providing Complete Information To Retirement Investors Act, to warn participants before making "potentially risky investment decisions."
While Banks said in a statement that the bill is aimed at warning investors about the risks of environmental, social and governance focused investing, the bill itself does not actually mention ESG.
"When it comes to making smart investment decisions, American retirees and workers deserve to be armed with the fullest information possible," he said. "My bill would ensure that ERISA participants are fully aware of the financial risks associated with ESG before they choose how to invest their hard-earned savings."
More broadly, "the concept of the bill may be helpful" to investors who may not understand the risks of investing their 401(k) savings outside of their plan's investment menu, Fred Reish, partner at Faegre Drinker, said in an email to ThinkAdvisor.
While he hopes "participants know that they're on their own when investing through the brokerage accounts, I suspect that is not the case," he said. "While some plan sponsors educate participants to that fact, I don't think that all do."
