Charles Schwab worries a Securities and Exchange Commission proposal to regulate money market mutual funds could harm financial advisors and their clients, Charles Schwab Investment Management President and Chief Executive Officer Marie Chandoha told Congress Wednesday.

One SEC proposal would create a category of funds for retail investors with the main criteria being an investor could not withdraw more than $1 million a day.

These funds would continue to have a stable $1 share value, while  money market mutual funds with higher withdrawals would allow a daily price variation based on the worth of the underlying assets, a concept known as floating net asset value or simply a floating NAV.

The Schwab executive said the proposed rule would require that the redemption limit be applied to the investment advisor’s underlying clients, either by the financial intermediary that has custody of the underlying clients’assets or the investment advisor itself.

Chandoha noted advisors typically bundle fund withdrawals of many retail clients into a single transaction, much in the same way that a financial intermediary holding an omnibus account bundles trades of its underlying customers.

However, she warned an advisor, however, is not an “omnibus account holder” under the proposed rule.

“If registered investment advisors are subject to the redemption limit, it would be penalizing the retail client who has elected to outsource their investment management to a professional rather than handle it themselves,” she said.

Schwab is seeking clarification on the proposal from the SEC. Chandoha comments came during a hearing on SEC money fund reform proposals at the House Financial Services Capital Markets Subcommittee.

Former Federal Deposit Insurance Corporation Chairman Sheila Bair said exempting retail funds from a floating NAV could leave retail investors holding the bag. Bair said the reason is institutional investors would be savvy enough to know when a retail fund is losing value and cash out, while retail investors would be stuck holding a fund with depleted assets. She called a floating NAV “honesty in accounting.”

Subcommittee Chair Scott Garrett (R-N.J.) didn’t say whether he supported the SEC’s package of proposals, but he did praise them as the result of a deliberative and thoughtful process.

In addition to bringing up the possibility of a floating NAV for large funds, the SEC said it is also considering mandatory liquidity fees and discretionary and temporary redemptions gates for all non-government money market funds during times of market stress.