Reprinted from The Economic Policy Institute by Monique Morrissey on February 15, 2017.
“While the headlines are dominated by White House leaks and personnel scandals, the Trump administration and Republicans in Congress have been quietly helping the financial industry siphon off your retirement savings,” writes Monique Morrissey for The Economic Policy Institute. “First, the administration announced that it was reviewing a rule scheduled to take effect in April requiring financial advisors to work in their clients’ best interests. Yes, you read that correctly. Some people presenting themselves as financial advisors can now legally steer you to rip-off investments, a glaring problem the Obama administration addressed in a commonsense rule six long years in the making.
“The rule, backed by the Consumer Federation of America, Senator Elizabeth Warren, Vanguard founder John Bogle, and others, applies to brokers, plan consultants, and others advising participants in 401(k)-style plans and IRAs who don’t already adhere to a fiduciary standard. Among other things, it prohibits financial professionals from pretending to offer disinterested retirement advice while working on commission and from steering retirement savers to higher-cost investments when similar but lower-cost options are available. Importantly, the rule protects job-leavers from being lured into rolling over their pensions and 401(k)s into higher-cost IRAs, at a time in their life when many people are vulnerable to bad advice.
“How can anyone argue against the fiduciary rule with a straight face? The financial services industry counters that if some clients don’t get bad advice, they may not be able to afford advice at all. This is like dietitians arguing that clients may not be able to afford nutritional advice if it’s not paid for by Coca Cola. The industry also says the rule could put some people out of business, which isn’t reason to oppose it—it goes without saying that we shouldn’t prop up a business model where survival is dependent on fleecing savers. …