Connect with us

Strategies

Why Is This Administration Making It Harder to Save for Retirement?

Published

Why Is This Administration Making It Harder to Save for Retirement?

The Trump Administration’s motivations in attempts to delay or kill the investor-friendly 2016 Final DOL Fiduciary Rule are suspect. Trump has stated he will eliminate regulation. But some regulation is strongly in the public interest. The DOL Final Fiduciary Rule falls into that category, as Courts have opined.

Americans’ retirement accounts are being systematically looted because of conflicts of interest at broker-dealers, insurance companies, banks and some mutual fund companies. The 2016 Fiduciary Rule would not have been necessary if all who advise retirement investors were already doing so in the investor’s best interest.

Fiduciaries Already Work in Investor’s Best Interest

There are already many fiduciaries already at work in the best interest of investors. The 36.4 million investors who work with fiduciary Registered Investment Advisers (RIAs) already receive advice in their best interest, at a reasonable cost, from the 11,800-plus RIA firms that serve investors as fiduciaries – in all types and sizes of accounts – not only in retirement accounts. RIAs employ 781,000 individuals, and manage $66.8 trillion, according to the Investment Adviser Association’s 2016 Evolution Revolution[1] report.

RIA firms range from small to very large. If they, across all sizes of firm, can put fiduciary processes in place, as they have for decades, then non-fiduciaries that wish to participate in the retirement sector should have no problem putting fiduciary processes in place.

Fiduciaries, such as registered investment advisors – RIAs – advocate and work on behalf of investors, not themselves. It’s a healthy business model, built on integrity and service in the client’s best interest, not “caveat emptor! (buyer beware!)” and deceptive sales practices in order to fleece investors. RIAs follow a set of fiduciary principles like these, from The Committee for the Fiduciary Standard:

Five Core Principles:
 

  1. Put the client’s best interests first;
  2. Act with prudence, that is, with the skill, care, diligence and good judgment of a professional;
  3. Do not mislead clients–provide conspicuous, full and fair disclosure of all important facts;
  4. Avoid conflicts of interest;
  5. Fully disclose and fairly manage, in the client’s favor, unavoidable conflicts.
     

Can those who run firms that oppose the Fiduciary Rule say that? 

None that I can identify. In fact, executives at insurance companies, broker-dealers, banks and some mutual fund companies that oppose this rule all have financial axes to grind. When they complain about the “cost” of complying with the DOL Fiduciary Rule, it’s because they won’t be able to gouge investors anymore, so aren’t they actually saying that they overcharge investors? Of course they are.

To be clear, Registered Investment Advisers – already fiduciaries – stand to lose an important competitive distinction when all firms working with retirement investors are required to act as fiduciaries – as RIAs already do. But it is extremely important for every American, who sacrifices to save for their own retirement, to have investment advice that is in their best interest. This supersedes that competitive differentiator. Retirement investors need – and believe they are already getting – advice that is in their best interest. Nothing less will help them to achieve their goal of a secure retirement.

Related: The DOL Fiduciary Rule Does Not Cost Investors More or Limit Investor Access to Advice or Products

The Backstory

The Department of Labor under President Obama finalized a Fiduciary Rule that would have ensured that any retirement investor in America that wanted advice on what to put into their retirement accounts would get fiduciary advice – advice in the their best interest. The costs investors pay on these investments had to be reasonable — not unreasonably high. Why? Because high costs eat away at retirement investors nest eggs, every year, cutting that nest egg by 28% or even 50%. Most people can’t retire on half a nest egg.

That Fiduciary Rule was scheduled to go into effect last April. Then it was delayed until last June – and part of it did go into effect. But now, the current Trump Administration wants to delay this good-for-investors Fiduciary Rule for 18 months or more. But it wouldn’t end there…

Actually the Trump Administration is trying very hard to kill this Fiduciary Rule that would help investors end up with more for retirement. Why? They want Wall Street broker-dealers, insurance companies, banks and mutual find co’s to be able to get away with continuing to fleece your nest egg, as they have for decades.

It’s tough enough to save for retirement without some broker taking big bites out of your retirement savings and leaving you with half a nest egg.

Here’s what you can do:
 

  1. Tell your lawmakers to tell Trump that when you get advice on your investments you want that advice to be in YOUR best interest, at a reasonable cost. Don’t delay the DOL Fiduciary Rule. Believe it or not, Congressional staffs log EVERY call! US Capitol Switchboard (202) 224-3121
  2. Find an RIA firm — already fiduciary working in the best interest of all clients — who must always put YOUR interests first! Some resources below.
  3. Print out this Fiduciary Oath. Take it or email it to anyone who is providing you with investment recommendations or advice. Have them sign it. If they won’t, find an RIA firm that will. There are plenty of fiduciaries who work in YOUR best interest. Don’t put up with anyone who refuses to do so.
     

Here is a list of firms that have already committed to the Fiduciary Oath; Here is a list of RIA firms whose fiduciary practices have been certified by the Centre for Fiduciary Excellence. 

Continue Reading

Trending