Trump Administration Put Your Retirement Savings At Risk To Benefit Wall Street
The Department of Labor under the Obama administration passed a series of protections in 2016 collectively known as the fiduciary rule. The regulations simply required that advisors who sell retirement products must act in the best interests of their clients.
The Trump administration delayed the implementation of the rule, ultimately letting it die. This allows advisors to continue to recommend products that may be harmful to retirees but profitable for financial firms. According to the Department of Labor itself, receiving conflicted financial recommendations will cause workers to lose 17% of the value of their retirement accounts between the ages of 45 and 65.
In total people saving for retirement lose $17 billion per year as a result of conflicting financial advice.
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Treasurers from 11 states have written to the SEC asking for a more stringent fiduciary rule, saying in a March 8 letter that “any standard less robust than [the DOL’s rule] does not provide adequate protection for investors.” Those states are Pennsylvania, Oregon, Iowa, Maryland, Rhode Island, Illinois, Washington, South Carolina, Vermont, Utah and Wyoming. “This implementation delay, and the accompanying non-enforcement agreement, represent a step back in terms of protecting the interests of retirement savers and investors,” they wrote.
Trump’s DOL Pick Fought Fiduciary Rule
[A proposed replacement] does nothing to rein in the many perverse incentives that brokerage firms artificially create to encourage and reward recommendations that are very profitable to firms but harmful to investors, which is concerning because receiving conflicting financial advice is expensive. According to the DOL, “[A] typical worker who receives conflicted advice when rolling over a 401(k) balance to an [individual retirement account] at age 45 will lose an estimated 17 percent from her account by age 65.
