News & Updates

April 20, 2016


The Department of Labor (DoL) earlier this month released its final rule to update and strengthen protections for retirement savers.  The rule will protect hard-working Americans from losing money because of a conflict of interest when a broker or other financial professional provides retirement investment advice.  The release of this final rule is a tremendous accomplishment in the fight to improve our nation’s retirement income security.  It is estimated that the “fiduciary rule,” which is backed by leading groups representing consumers, older Americans, workers, and others, will prevent Wall Street from stripping $17 billion a year from retirement savings.

Here is what editorial boards, columnists, and others around the U.S. have said about this common-sense step by the DOL:


Retirement Savings Made Safer

New York Times Editorial

April 7, 2016

The road to retirement will be less rocky under new rules issued this week by the Labor Department. The rules require financial advisers to act solely in a client’s best interests when giving advice and selling investments for retirement accounts. The best-interest requirement, also known as a fiduciary duty, will be a big improvement on current practice, in which many advisers are free to steer clients into high-priced strategies and products even when comparable but cheaper ones are available.


If it’s your money, brokers should treat it as such Editorial

April 15, 2016

If you are consumer seeking to protect a nest egg, you probably have your doubts about whether financial advisers care more about their management fees than your retirement account. Their TV ads, for example, are deliberately misleading: Ameriprise once ran an ad that it is “ethically obligated to act with your best interests at heart.” It didn’t say “legally obligated,” because in subsequent litigation, it argued that it “owed no fiduciary duties to Claimants.” Wells Fargo ads boasted how “a healthy relationship with your financial adviser should make you feel that your best interests are the top priority.” But it argued in another proceeding that “the law establishes that a broker does not owe a fiduciary duty to a customer.”  So the time has come for the law to work for consumers, who have been burned by wealth managers for too long: The White House estimates that middle class families lose $17 billion every year as a result of “conflicted advice.”  The new regulations will protect owners of retirement accounts (including IRAs) from brokers, insurance agents and other types of financial advisers who “put their own profits ahead of their clients’ best interest” and force them to meet a higher fiduciary standard.


Finally, fee relief is on the way for retirement investors

Boston Globe Editorial

April 9, 2016

The announcement by the Labor Department Wednesday that it will require retirement-money professionals to act in the best interests of their clients prompted many people to ask the same question: You mean they weren’t already? Well, they didn’t have to, which led to a $17 billion problem that should have been solved long ago.  In their advertising, investment firms and independent brokers portray themselves as unfailingly trustworthy, focused solely on securing the best possible returns for customers. But, amazingly, they have not been legally obligated to adhere to that righteous standard. Under the existing regulations, an adviser only has to recommend “suitable” investments. US Labor Secretary Thomas Perez said the new rules mean that “putting the clients first is no longer a marketing slogan. It’s now the law.”


Editorial: Retirement advisers must now put customers first

St. Louis Post-Dispatch Editorial

April 7, 2016

 A new Labor Department rule requiring financial services advisers to put the interests of retirement savers ahead of their own is the best thing to happen to retirees since tax-advantaged retirement accounts were created.  The rule, which took effect Wednesday, is a game-changer for retirement savers. Before this change, financial advisers were allowed to play with other people’s money for their own enrichment, without having to act in their client’s best interests.  That was patently unethical and unfair, but there was nothing in place to prevent it. The new rule forces advisers to operate with the same sort of ethical and legal standards as a family doctor, providing the best advice regardless of the impact on their own finances.


The ‘fiduciary rule’ is a great victory for retirement savers

Alicia Munnell for MarketWatch

April 20, 2016

The new rule is needed because the retirement savings landscape has been transformed since the Employee Retirement Income Security Act (ERISA) was passed in 1974.  The displacement of defined benefit pension plans by 401(k) plans and Individual Retirement Accounts (IRAs) has transferred responsibility for investment decisions from employer to employee.  Many workers have accumulated plan balances that are insufficient to maintain their standard of living in retirement.  Although a number of factors have contributed to inadequate plan balances, subpar investment returns due to high fees undoubtedly play a part.  The new rule is designed to eliminate the incentive for brokers to put retirement savers in inappropriate investments. Fiduciaries can’t do that, because they are bound by the “best interest” standard.  So the strategy of the rule is to expand the group of investment professionals who must act as fiduciaries.

Keep our retirement savings safe

Gene Varela, AARP State Director

Albuquerque (NM) Journal

April 3, 2016

Millions of Americans are counting on their 401(k) and retirement accounts for a secure financial future, and I’m counting on our members of Congress to oppose any effort that would prevent the Department of Labor from closing a loophole that allows unscrupulous financial planners to play with your hard-earned money for their benefit.  The Department of Labor is finalizing a new rule that would close the loophole and hold all financial advisers accountable for giving you the best possible retirement advice that meets your needs.  Why? Because it’s a multi-billion-dollar problem for people who work hard and save for retirement.

More than $17 billion in retirement savings is lost yearly due to unscrupulous financial advisers, who push products that are good for their bottom line, not yours. The Department of Labor has proposed a new fiduciary rule for all financial professionals who provide retirement plan investment advice. They would be required to adhere to standards that are in the best interest of their clients. This conflict of interest loophole can result in typical savers losing about 25 percent of their hard-earned retirement savings over their lifetime.


Fiduciary rule presses Wall Street to raise bar on retirement advice, so why not for all advice?

Tampa Bay Times Column

April 15, 2016

I’ve watched Wall Street firms for years vigorously fight rules that would require investment advisers and brokers to put customer interests ahead of their own wallets. It’s proved a long, cynical and, at times, demoralizing experience.  ome on, people. Would you balk if doctors choose to give only “good enough” treatment rather than what best suits the patient?  It should be no different with money advisers. As America is finding out the hard way, saving money — especially for retirement, when there’s rarely enough time left to make up for mediocre investment advice — is tough enough under the best circumstances.  This month, the U.S. Department of Labor issued rules that require financial advisers of retirement accounts (including individual retirement accounts and health savings accounts) to act in their clients’ best interest.  Labor Department Secretary Tom Perez reminds us that the new rule is an attempt to catch up with today’s very different economic scene. “The retirement landscape has changed dramatically over the last 40 years,” he told Bloomberg News.


Hard-Working Americans Who Play By The Rules Deserve Retirement Security

Senator Cory Booker and Senator Elizabeth Warren op-ed

Huffington Post

April 7, 2016

Doctors have a sworn obligation to put the best interests of their patients’ above all other interests, including their own. Lawyers have a professional responsibility to protect the best interests of their clients above any other interests, including their own. But, remarkably, financial advisers are allowed to recommend products to unsuspecting customers that are a great deal for the adviser, but not for the person seeking advice. While most advisors put their clients’ interests first, some do not, and there has been no law to stop them. That has cost Americans an estimated $17 billion annually, and, to most people, makes no sense at all.  Yesterday, the Obama administration changed that by unveiling new guidelines that establish a professional and legal obligation for retirement advisors to provide advice that puts their clients’ interests first.


Tweaks to final DOL fiduciary rule help ease implementation without sacrificing core principles

Blaine Aiken op-ed

Investment News

April 14, 2016

April 6, 2016 was a transformational day in the history of financial services regulation. After more than five years in the making, the DOL’s fiduciary rule was released.  The basic framework of the 2015 proposal remains intact even though the DOL made some important concessions to improve the rule’s workability for securities-licensed personnel who will have to adapt to becoming fiduciaries for the first time. The changes made also help the DOL demonstrate that it has been responsive to concerns expressed by the brokerage and insurance industries and their advocates in Congress.  The final rule sweeps away the essentially unenforceable five-part test for determining fiduciary status. The new definition closes the giant loophole created by the original 1975 requirements that advice be regular and the primary source of decision-making in order for fiduciary status to apply — these provisions are gone. As a result, virtually everyone who provides investment advice for compensation in the retirement space will be fiduciaries — a big change for securities-licensed representatives who have escaped fiduciary accountability under the old definition.  …It’s been a long wait between the DOL’s comment period on the rule, and the momentous industry impact now driven home by the final rule’s release. The DOL has proven to be good on its word. It made significant changes to address practical impediments to implementing the rule, without sacrificing core fiduciary principles.


Customers First Becomes the Law in Retirement Investing

NY Times

April 6, 2016

The rules governing how financial professionals handle the trillions of dollars they invest on behalf of Americans saving for retirement are about to get a lot tougher.  The government move is expected to encourage a shift of retirement funds into lower-cost investments — potentially saving billions of dollars for many ordinary investors — while setting off one of the biggest upheavals in the financial services industry in decades.


U.S. Unveils Retirement-Savings Revamp, but With a Few Concessions to Industry

Wall Street Journal

April 6, 2016

The Obama administration Wednesday rolled out a long-anticipated new rule aimed at transforming the way the financial industry delivers retirement-savings advice—but offered significant concessions to critics that could make it more palatable and less disruptive for brokers.  The fiduciary rule is aimed at curbing billions of dollars in fees paid annually by small savers who transfer money out of 401(k)s, which are required to operate in their best interests—and into individual retirement accounts, which aren’t currently bound by such protections. There, savers may be working with financial-product salespeople who earn more selling certain products and don’t have to put their clients’ interests before their own.  Administration officials intend it as a direct attack on what they consider “a business model [that] rests on bilking hard-working Americans out of their retirement money,” Jeff Zients, director of the White House National Economic Council, told reporters Tuesday.


How ‘Fiduciary Standard’ Rule May Change Your Investment Advice

NBC News

April 6, 2016

You may have assumed that the financial professional you’ve relied on to advise you on your retirement savings had your best interests at heart. That was not always the case. Individual investors have more than $24 trillion in retirement savings, including $7 trillion that’s stashed away in Individual Retirement Accounts, or IRAs. A new rule announced Wednesday by the Department of Labor is going to change the way people get advice on how to invest that money, by holding investment professionals to what is called a “fiduciary standard.”


ICYMI: The White House just released new rules protecting retirement savers. Here’s why they’re needed 

LA Times

April 6, 2016

On Wednesday, the Department of Labor released the final version of its fiduciary rule requiring brokers to put their retirement saving clients first — placing the customers’ interest ahead of their own.  Though this may seem self-evident, the rule has been ferociously fought by the financial services industry. Among other things, the industry complained that the proposed rule would be too costly, especially for small brokers, and pile on too much paperwork. In its defense, the Labor Department argued that the rule would save as much as $17 billion a year lost by small investors placed into risky or inappropriate investments by advisors hiding their conflicts of interest. The department modified some aspects of the proposal to meet some industry objections, but kept most of it intact. A Labor Department fact sheet on the rule, which will begin to be phased in next April, is here. … I examined the necessity for the rule last year, and reprint that column below. I also examined the advertising campaign launched by the financial advice industry to kill the rule. A video from that campaign can be found below too.


An overhaul is on the way for the $25 trillion retirement industry

Boston Globe

April, 6, 2016

The US Labor Department finalized rules on Wednesday aimed at overhauling the $25 trillion retirement industry, making companies and financial advisers more accountable.  For the first time, brokers will have to put the best interest of their clients first, instead of just making recommendations that are suitable to the investor.

Regulators and consumer advocates have been concerned that investors have been steered into high-fee, low-performing funds that eat into their retirement savings because brokers are paid commissions and earn perks, such as Caribbean vacations, for selling these products. The Labor department estimates that consumers lose $17 billion a year due to excessive fees.


Labor Department rule sets new standards for retirement advice

Washington Post

April 6, 2016

The Labor Department announced sweeping rules Wednesday that could transform the financial advice given to people saving for retirement by requiring brokers and advisers to put their clients’ interests first.  The long-awaited “fiduciary rule” would create a new standard for brokers and advisers that is stricter than the current regulations, which only require that brokers recommend products that are “suitable,” even if it may not be the investor’s best option.

At a time when mom-and-pop savers are increasingly being put in charge of their own retirement security, the rule is meant to add a new layer of protection to guard workers from poor or conflicted investment advice. The rule is supposed to improve disclosures and to reduce conflicts of interest, such as cases when a firm is paid by a mutual fund company or other third party for recommending a particular investment.


New White House Rule Protects Retirement Savers From Bad Investment Advice


April 6, 2016

The Obama administration issued a new rule designed to safeguard retirement savings from costly and misguided investment advice. Some parts of the financial industry worked hard to block the rule, but it survived.  When you ask a financial adviser for help in managing your retirement account, how can you be sure you’re getting good advice? The Obama administration has wondered that too. It rolled out a new rule today that it says could save investors some $17 billion a year. NPR’s Scott Horsley explains. 


The Obama Administration Is Finally Making Retirement-Savings Advisers Put Clients First

Money Box

April 6, 2016

Saving for retirement might just get a bit easier for millions of Americans in the coming years, and for once, we don’t need to do a thing. This time, it’s our financial advisers who are being held to account.  Under the new regs, financial advisers giving recommendations on retirement investments will have to offer advice that’s strictly in the best interests of their clients, something known as the fiduciary rule. Remarkably, as I’ve written many times, this is not the current standard. Instead, many financial advisers currently need to adhere to something called the suitability standard. That allows them to make suggestions for retirement investments that take into account how clients’ investments buttress their own bottom line. The advice just couldn’t be out-and-out malfeasant.


Conflict of Interest Rule Could Save Americans Billions in Retirement


April 6, 2016

When it comes to retirement planning, it’s not just about how much you save, but with whom.

A new Labor Department rule announced Wednesday will require brokers to put clients’ interests ahead of their own when it comes to retirement investments, tightening current industry standards that can incentivize brokers to push high-fee products that prioritize their own profits.

The shift could save billions of dollars annually for investors, who increasingly hold their money in self-directed individual retirement accounts as opposed to defined benefit plans or 401(k)s, according to a separate White House Council of Economic Advisers analysis issued last year.


What is a fiduciary? The answer could impact your retirement

CBS News

April 7, 2016

Now that the Department of Labor has finally wrapped up its long-awaited “fiduciary” regulations, many Americans must be wondering: What’s in it for me? Consumer advocates claim the new rules will save retirement investors billions of dollars each year, but many in the financial industry argue that the new rules will harm American workers, particularly savers with small accounts.  It’s important to note that the new rules don’t go fully into effect until 2018, and industry objections to them could lead to changes resulting from lawsuits or follow-up legislation from Congress. But it’s even more important to understand what the fiduciary rules are all about and how they might affect your retirement planning.


Investment Advice Just Got a Lot Safer

Time Magazine

April 7, 2016

When you go to your doctor, he or she has an official duty to offer you the best possible care—that’s what the Hippocratic Oath is all about. But until now, when you’ve gone to see an investment broker or retirement planner, the same hasn’t necessarily been true. Financial advisors, brokers and other such professionals have been able to offer all sorts of products that aren’t necessarily in their clients’ best interest, as long as they qualified as “suitable,” a very low bar to pass.  That’s all about to change.


A new Obama rule could save ordinary investors billions in hidden fees


April 6, 2016

You know setting aside money for retirement is smart, but you don’t know anything about how it works. You need advice. Where do you turn?  Maybe you have a financially savvy friend or family member. But a lot of people turn to professional advisers. Until now there have been two different kinds of investment advisers: those who are required to work in your best interests, and those who — amazingly — are not. But a new rule from the Department of Labor, which becomes final today, aims to change that. Under the new rule, savers will gain the right to sue or initiate arbitration against advisers who don’t meet high ethical standards or who fail to disclose conflicts. The effect, say both experts and many industry advocates, will be to drive many advisers to change their business models, while pushing others entirely out of the business. And that’s probably a good thing.


The entire financial advice profession needs to be fixed


April 9, 2016

If you had to build the personal financial advice profession from scratch, it wouldn’t look anything like what we have today.  Instead, it would look more like other professions – not other industries. It would look more like the world of lawyers, doctors, and certified public accounts and not the world of car, pharmaceutical, and house siding sales. What we have today is this mad mad world where consumers seeking financial advice can choose from any number of providers, some of whom are nothing more than pharmaceutical salesmen masquerading as physicians and some of whom are truly acting in your best interest, as fiduciaries. What we have today is a financial advice delivery system that is quite confusing as various studies, including one conducted for the Securities and Exchange Commission in 2008, have shown. That study, for instance, found that consumers can’t tell the difference between a salesman (or what the industry routinely refers to as a producer) and an adviser.  Thankfully, the Labor Department has unveiled new rules that will help investors get advice for their retirement accounts that’s in their best interest from a fiduciary rather from someone who is merely recommending products that that are suitable and earning crazy commissions and fees.


Fiduciary rule will give investors the honest advice they need

St. Louis Post-Dispatch

April 10, 2016

The financial advice industry is about to go through its biggest regulatory change in decades, but many retirement savers may not even notice. When a new Labor Department regulation takes full effect in 2018, Americans with Individual Retirement Accounts and 401(k) plans will finally get the unbiased advice they think they’ve had all along. Under the existing rules, they weren’t always getting that. As long as an investment was broadly suitable, many investors got the product that was most profitable for the broker instead of the one that was best for them.  That has to end under final rules published Wednesday by the Labor Department. The rules require retirement-account advisers to act as fiduciaries, which means they must always act in the client’s best interest.


New rules to shine more light on hidden retirement fees

Detroit Free Press

April 6, 2016

When you pull up to the pump, you know the price you’re going to pay for a gallon on gas. When you shop for milk, you glance at the supermarket shelf to know how much cash you’ll hand over at the register. But how much did it cost you to have someone manage your retirement savings accounts? Retirement savers — who increasingly don’t have the security of a pension — too often have been left in the dark about the kind of money they’re handing over for commissions, advice or high-cost products. Some would argue that a major part of the financial services industry is built on hiding all those fees. On Wednesday, the U.S. Department of Labor finalized a rule some advocates predict could save consumers tens of thousands of dollars over their lifetimes. The proposal, which has been six years in the making, is complicated but aims to address conflicts of interest involving financial advice and mandate more disclosures of costs


Fiduciary standard puts retirement investors first

Chicago Tribune

April 6, 2016

Tensions are rising in the financial services industry, as the Department of Labor gets ready to release its final rule about the fiduciary standard for professionals who service retirement savers. The rule change is intended to crack down on “backdoor payments and hidden fees,” which cost retirement savers up to $17 billion a year in excess fees and adverse performance, according the president’s Council of Economic Advisers.  “Fiduciary” is a fancy way of saying that a financial professional must put your needs first and must pledge to disclose and manage any conflicts of interest that exist. For example, if an investment consultant, broker or insurance salesperson recommends that you roll over your old retirement account into a new one in which you will pay higher costs than your old plan, he or she must document why it is in your best interest to do so and must tell you if he or she receives any compensation for the investments within the new portfolio. Prior to the pending rule, many investment professionals were held to a lesser standard, called “suitability,” which means what they sold you had to be appropriate, though not necessarily in your best interest.


Retirement advisers have to act in your best interests, for a change

San Francisco Chronicle

April 6, 2016

The Department of Labor on Wednesday adopted a landmark rule, six years in the making, that requires all professionals who give advice about 401(k) plans, IRAs and other retirement accounts to act in their clients’ best interests.


Go to the top of your retirement adviser’s priority list

April 7, 2016

We naturally assume that our money managers, our financial advisers, our brokers have our best interests at heart, what’s known as a “fiduciary” duty.  If not ours, whose best interests are they representing?  Well, by law, many of them weren’t required to give our interests top priority – until now.  The U.S. Department of Labor issued final rules Wednesday that hold financial advisers to a fiduciary standard if they work with retirement savings. That means they must work on their clients’ behalf and generally avoid conflicts of interest.

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