Why hasn’t the Department of Labor already taken care of the problem? One reason is that powerful interests on Wall Street have launched an aggressive campaign to stop the DOL from updating its rule. There is a huge amount of money at stake, since Americans hold trillions of dollars in their 401(k)s and IRAs. The industry wants to continue slicing off large pieces of that pie by selling retirement investments with hefty costs, poor returns, and high risks. The industry does not even want to let the DOL issue a draft rule for public comment. They are spending lots of money lobbying against a new rule on Capitol Hill, at the DOL, and in the media. And they’re making deceptive arguments. For example, brokerage firms are claiming they’ll stop offering investment advice if they have to act solely in their clients’ best interest, and that small savers will have no one else to turn to for guidance. And they argue that other rules and regulations already protect workers and retirees from abuse.
None of those claims hold up. The industry’s main argument boils down to this: “If we can’t take advantage of our clients, then we won’t do business with them.” But if that’s their position, then they shouldn’t be giving investment advice. We also know that some financial advisers are perfectly willing to assist even small account holders while adhering to the “best interest” fiduciary standard. And no other rules or regulations provide the same level of protection that the “best interest” standard can.
The reality is that—
1)Many advisers are providing investment advice that pays them handsomely but doesn’t serve their clients’ best interest;
2)Those conflicts of interest are taking a huge toll on the retirement savings of millions of workers and retirees; and
3)an updated rule from the DOL can solve the problem.
The stakes are huge: Will millions of hardworking Americans be able to afford a decent place to live, food on the table, and the medicines they need once they retire? The odds go down if the DOL is prevented from updating its rule and protecting those workers from the abusive practices that today are draining away so much in retirement savings. That’s why we need you to support the DOL’s effort.