Coalition Urges Labor Department to Protect Retirees’ Nest Eggs

Public interest groups have joined forces in a coalition to prod the U.S. Department of Labor to revise rules requiring financial advisers to act in their clients’ best interests when offering retirement investment advice.

SaveOurRetirement.com, a website created by the coalition, is urging the Labor Department to update the so-called fiduciary rule. Without that safeguard, advisers to retirement plans could sell financial products that pay large commissions yet hurt their clients with unnecessary fees, poor returns or excessive risks, the coalition said.

“Right now, some advisers are required to put their customers’ interests first, while others are not — and it is often extremely difficult for workers and retirees to know which type of adviser they are dealing with,” according to a statement from the coalition.Accounting Series - Senior Finances

The issue has taken on greater urgency as the amount of money in 401(k) savings plans has swollen to $4.4 trillion as of June 30, 2014, according to the Investment Company Institute.

Moreover, an amended fiduciary rule would also cover advisers to investors in IRA plans.

“With the continued shift to self-managed individual retirement account plans, such as 401(k) plans and IRAs, individuals need investment advice free of conflicts and in their own best interests, now more than ever,” says David Certner, AARP’s legislative policy director.

>> Get discounts on financial services with your AARP Member Advantages.

The Labor Department originally proposed an amended fiduciary rule back in 2010. It was delayed, and a revised proposal is expected sometime this month.

Coalition members are AARP, the Consumer Federation of America, the Pension Rights Center, the American Federation of State, County and Municipal Employees, the American Federation of Labor-Congress of Industrial Organizations, Americans for Financial Reform, and Better Markets.

Photo: Lisafx/iStock

Also of Interest

 

See the AARP home page for deals, savings tips, trivia and more.

3 comments
2Papa
2Papa 5pts

They have my full support in this endeavor. We don't need advisors recommending investments just so they can get a commission. It is a conflict of interest for sure. Write your congressman today!

bobcox
bobcox 5pts

Since all we laborers and salaried worker contributed to the Social Security Trust Fund, Congress does not, in my opinion, have the right to stop the provisions of the Social security systems.  If they do, it is stealing!  If they want to make the Social Security Trust Fund stronger, as Ronald Reagan did, they should extend the cap for contributions to infinity, i.e., all incomes, from what ever source, should be subject to the FICA tax.  The Trust Fund is administered by a select gorp  of people required to managed the Fund by investing excess funds beyond current requirements, in low risk securities.  This means that the Trust Fund has a large stock of U.S. Government Bonds.  the administrative cost for all Social Security has averages in the vicinity of 1.5%.  Alternative procedures, such as Insurance Companies, etc., have an overhead of 30-35% off the top and Hedge Fund managers take more than that.

myexper
myexper 5pts

@bobcox 

Extending the cap as you said is one solution. But today's Republican Party is not the Republican Party of the Reagan times you bring up. Today's Republican Party seeks to destroy Social Security. Republicans would rather see Social Security completely destroyed than raise ANY taxes on the more wealthy. Republicans only want to protect the 1% , the most wealthy Americans. Reagan would not recognize today's despicable Republican Party.