The Death of the Fiduciary Rule Is Bad News for Your Retirement
The fiduciary rule is one step closer to death , which means your retirement manager can cheat you again.
I’m sure they disagree with the wording, but this is actually what they do. Many financial planners do not require the advice they give you to be in your best interest – it only needs to meet the “fit” standard. Instead, they may offer products and tools that will give them a kickback, even if those products don’t work as well as others or are charged higher fees. In fact, the White House Council of Economic Advisers found that non-subsidiary companies cost retirement investors (aka you and me) $ 17 billion a year .
Do you know who should be working to your advantage? Fiduciaries. There are many – you can find one here – and these consultants are committed to doing what is best for you, your client. For example, Certified Financial Planners (CFPs) and Registered Investment Advisers (RIAs) are fiduciaries. They do not receive kickbacks from certain products, and they do not charge additional commissions. Instead, they will help you come up with a financial plan that suits you .
The Obama administration’s fiduciary rule would require all financial professionals (such as brokers and insurance agents) to adhere to a “fiduciary” standard, meaning they would have to work in your best interest to advise you on your retirement investment. … They just would have to put your needs ahead of theirs.
Naturally, the financial industry was underwhelmed. How can they continue to make such huge returns if they cannot fool the average investor with his or her retirement savings?
Thus, Republicans have postponed implementation of the rule for almost a year – fortunately for them, “fiduciary” is such an aggressively boring word that it is easy for the average person to overlook its importance, and because of it it is difficult to get angry. A federal appeals court ruled today that the Department of Labor exceeded its mandate in writing the rule. The conclusion did say that Congress or some other “appropriate” state or federal government could take action to enact it, albeit with a joyful reaction from Republicans, most notably House Speaker Paul Ryan, who called it ” good news for the economy. ” but it is not. won’t happen anytime soon.
The Republican argument against the fiduciary rule is that it will be difficult for people on low incomes to see a financial planner. To overcome the ambiguity, this means that low-income people would have a harder time being deceived and disproven by planners who would not hesitate to siphon off the paltry retirement savings that the average American manages to hide undercover. “Advise” them. This is not the best argument.
Who else has fiduciary responsibilities? Lawyers are a typical example. Would we all be happy with some lawyers violating client and attorney privilege or making a defense deal to get some of their client’s payout on the backend if they charge the client a little less upfront? Not?
So what can you do? Well, of course you know this is happening. If possible, hire a “paid” planner to advise you on your investment. And lobby your state government to establish its own version of the fiduciary rule. And he might get a little angry about it.