U.S. Department of Labor’s Fiduciary Rule for Retirement Advisers Hits Another Snag

Just as the Department of Labor appeared poised to push out its proposal to impose a fiduciary standard on retirement advisers, financial industry members have once more stepped forward to try to implement certain changes.

Last month, financial industry trade groups met with White House aide Valerie Jarrett to express their worries. The groups are concerned that certain restrictions will limit how much compensation brokers that sell investments for IRAs would be able to get for their services. They believe that this will stop representatives from dealing with investors who have middle-range incomes.

Meantime, the DOL contends that the proposed rules are needed to protect retirees and workers from getting advice that may be tainted by conflicts of interest. For example, a broker might be tempted to sell a retirement investment product that comes with a high-fee, which could hurt a client’s savings.

The DOL had withdrawn its original version of the proposed rule in 2011. Now, the Obama Administration seems ready to back what would be the re-proposed version.

A memo leaked from the head of Obama’s Council of Economic Advisers indicates this support. It claims that excessive trading and expensive investments could cost investors anywhere from $8B to $17 billion annually.

Once the DOL sends the proposal to the Office of Management and Budget for examination, that office will have up three months to determine the regulatory impact. If OMB approves the proposal then the Labor department would put it out for the public to issue comment.

Financial industry players want the DOL to work with the SEC on any making of fiduciary rules.

Investors often depend on their retirement funds at a time in their lives when they no longer have a regular source of income. To sustain losses, especially because of excessive fees, can be costly both financially and emotionally, affecting not just an investor’s quality of living but also his/her ability to get medical and nursing care when older. At Shepherd Smith Edwards and Kantas, our retirement adviser fraud lawyers are here to help investors recoup their losses.

DOL fiduciary rule stalls again as brokerage industry makes last-minute push against it, Investment News, February 6, 2015

Definition of the Term “Fiduciary” Proposed Rule, United States Department of Labor

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