Americans who receiving retirement investment advice need better protection and a rule proposed by U.S. Department of Labor’s would limit conflicts of interest and increase accountability.
Pres. Obama spoke Monday in favor of the rule, which the department is expected to submit formally in the coming months. It needs to be reviewed by the Office of Management and Budget then returned to the department for final action.
A White House report released Monday shows that conflicts of interest are costing middle class families and individuals up to $17 billion each year. It said that the current regulatory process cost savers billions of dollars a year.
Financial advisers can recommend investments based on their own interest – such as those that pay generous commissions – not because they serve their clients’ best interest.
The rule would have an impact on thousands of brokerages, from large players such as Fidelity, Wells Fargo, Charles Schwab, and Raymond James, to smaller, independent shops, according to the Reuters article “Obama Takes Aim at Brokers’ Fees on Retirement Accounts.”
Wall Street groups have lobbied for years against efforts by the department to adopt a new fiduciary rule, forcing the department in 2011 to scrap its first draft of the plan, the article said.
The members of SaveOurRetirement.org, who support the proposed rule, said:
As the nation’s most prominent retiree, labor, consumer, and financial reform organizations, we welcome President Obama’s support for protecting American workers and retirees from harmful conflicts that eat away at retirement savings. By all accounts, the Department of Labor has engaged in a thorough economic analysis and careful deliberations. We hope and expect that once the rule is finalized, it will move all Americans closer to a decent, financially secure retirement.
The seven organizations that launched the SaveOurRetirement.org campaign are AARP, AFL-CIO, AFSCME, Americans for Financial Reform, Better Markets, Consumer Federation of America, and Pension Rights Center.