{"id":7729,"date":"2023-10-31T19:14:48","date_gmt":"2023-10-31T19:14:48","guid":{"rendered":"https:\/\/infundpros.com\/business\/biden-administration-wants-to-kill-junk-fees-in-retirement-investments-and-advice\/"},"modified":"2023-10-31T19:14:49","modified_gmt":"2023-10-31T19:14:49","slug":"biden-administration-wants-to-kill-junk-fees-in-retirement-investments-and-advice","status":"publish","type":"post","link":"https:\/\/infundpros.com\/?p=7729","title":{"rendered":"Biden administration wants to kill \u2018junk\u2019 fees in retirement investments and advice"},"content":{"rendered":"
\n

\n As part of its ongoing effort to make it easier for Americans to amass retirement savings and protect consumers from having to pay \u201cjunk\u201d fees, the Biden Administration on Tuesday released a proposed rule that would require any financial adviser, broker or insurance agent who sells retirement investments and advice to only do so in the best interest of their clients, not their own.\n <\/p>\n

\n \u201cThat means that if a retirement investor receives investment advice from a firm or someone and compensates that person for providing that advice, the retirement investor has the right to expect that the person providing the advice is going to act in the investor\u2019s interest, and not in the advice provider\u2019s own interest,\u201d the Department of Labor said in a fact sheet on the rule.\n <\/p>\n

\n While there are already fiduciary, \u201cbest-interest\u201d rules in place from the Employee Retirement Income Security Act, which governs retirement savings plans, and from the Securities and Exchange Commission, which is charged with protecting investors when they purchase and sell securities, they don\u2019t cover all types of investment products that retirement savers may be sold or all types of retirement savings transactions, such as one-time rollovers from a 401(k) to an IRA.\n <\/p>\n

\n Generally speaking, whether advising an individual on what to do with their retirement savings or offering an employer advice on the investment options to include in a workplace retirement plan, advisers acting in a fiduciary capacity must avoid conflicts of interest. That is, their advice shouldn\u2019t steer a client toward one product or service over another based on how much more they or their firm can make by doing so. <\/strong>\n <\/p>\n

\n The DOL\u2019s proposed rule seeks to ensure \u201call retirement investors receive the same quality of investment advice regardless of product or services,\u201d said DOL Acting Secretary Julie Su in a call with reporters.\n <\/p>\n

\n Among the types of investments that federal fiduciary rules don\u2019t cover are non-securities such as real estate, commodities and some types of annuities, which like an employer pension can offer retirees fixed payments for life or for a period of years, depending on how the product is structured.\n <\/p>\n

\n Annuities are insurance products and are regulated by state law \u2014 so the rules will vary by state. How they work can be complex to understand, and their fees can be high.\n <\/p>\n

\n One situation the proposed fiduciary rule seeks to eliminate is when a person is sold a high-cost annuity, for which a broker may get a generous commission, that isn\u2019t best suited to the client\u2019s needs. As an example, the White House estimates that absent a fiduciary standard, the sales of just one such product \u2014 fixed index annuities \u2014 may be costing retirees up to $5 billion a year.\n <\/p>\n

\n Across all retirement products, \u201crequiring advisers to make recommendations in the savers\u2019 best interest can increase retirement savers\u2019 returns by between 0.2% and 1.20% per year. Over a lifetime, that can add up to 20% more retirement savings\u2014potentially tens or even hundreds of thousands of dollars per impacted middle-class saver that could otherwise have been lost to junk fees,\u201d according to a White House factsheet.\n <\/p>\n

\n The new proposed rule follows earlier attempts by the Labor Department to broaden and standardize the circumstances in which financial advisers must act in retirement savers\u2019 best interests. But those attempts didn\u2019t withstand judicial challenge.\n <\/p>\n

\n It is not clear yet whether the changes called for in the latest proposed rule will be sufficient to quell the opposition earlier versions faced. But industry pushback is expected, including from the Insured Retirement Institute, a trade association for the insured retirement industry.\n <\/p>\n

\n In a pre-buttal to the rule\u2019s release, the IRI, noted that in recent years \u201cregulators at the federal and state levels have adopted and implemented significant and workable new regulations that directly address conflicts of interest that DOL is purportedly seeking to address with this new proposed rule.\u201d\n <\/p>\n

\n As an example, according to the IRI, 40 states have already enacted a regulation requiring insurance producers to satisfy a best interest standard that aligns with the SEC\u2019s Regulation Best Interest (Reg BI). \u201cAnd the remaining states are expected to do so in 2024,\u201d IRI said.\n <\/p>\n

\n In response, a senior DOL official told CNN \u201cthat standard is not sufficiently protecting consumers in those [40] states. We believe retirement savers deserve protection no matter which state they live in and this proposal would ensure that they don\u2019t need to understand which set of rules they happen to be operating under \u2014 there would instead be a consistent standard for all.\u201d\n <\/p>\n

\n After the DOL publishes its proposed rule, there will be a 60-day period for public comment, after which possible revisions to the rule may be made before it is finalized. But there is no timeline yet for when that will be, the official said.\n <\/p>\n<\/p><\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

As part of its ongoing effort to make it easier for Americans to amass retirement savings and protect consumers from having to…<\/p>\n","protected":false},"author":1,"featured_media":7730,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[22],"tags":[],"class_list":{"0":"post-7729","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business"},"yoast_head":"\nBiden administration wants to kill \u2018junk\u2019 fees in retirement investments and advice | inFundPros<\/title>\n<meta name=\"description\" content=\"As part of its ongoing effort to make it easier for Americans to amass retirement savings and protect consumers from having to pay \u201cjunk\u201d fees, the Biden\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" 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