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.
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.
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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.
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