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Statement of U.S. PIRG Consumer Program Director Ed Mierzwinski
“Today, the Labor Department’s rule requiring retirement advisers to make 401-k and IRA investment recommendations to you based on a fiduciary standard, or in your “best-interest,” not theirs, goes into effect after a 2-month delay imposed by the Trump administration. The Obama administration’s National Economic Council had calculated that retirees lose $17 billion annually due to the weaker “suitability standard” (which still applies to brokers pitching non-retirement investments). The delay cost retirement savers one-sixth of the first year’s expected savings, or $2.8 billion.
PIRG commends former Labor Secretary Tom Perez for completing the rule, which had been opposed since 2010 by powerful Wall Street and insurance company lobbyists seeking to maintain the right to push over-priced investments with high commissions and fees that are more suitable for them than you. The rule is critical to ensure that consumers saving for retirement do not lose money due to conflicts of interest.
Some firms are already complying with the rule, but others are resisting it and may claim your account is too small for you to continue as a client. If you hear that, take the advice of leading expert Barbara Roper of the Consumer Federation of America, who says: “Take a moment to count your lucky stars. A firm that will only “advise” you if it can profit unfairly at your expense is not where you want to keep your money.”
PIRG will be vigilant to protect the rule. The Trump administration is still looking for ways to weaken the rule. The Financial Choice Act passed by the House yesterday, and other proposals, would repeal or delay it indefinitely and industry lobbyists are hoping to load up 2018 appropriations bills with policy riders to weaken or block it.
But as of today, your retirement investments are in your own best interest.”
U.S. PIRG is the federation of state Public Interest Research Groups. PIRGs are non-profit, non-partisan public interest advocacy organizations that stand up to powerful interests whenever they threaten our health and safety, our financial security, or our right to fully participate in our democratic society. On the web at www.uspirg.org.
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