Hard-Working Americans Who Play By The Rules Deserve Retirement Security

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Source:   —  April 07, 2016, at 8:02 PM

Lawyers have a professional responsibility to defend the best interests of their clients over any other interests, including their own. But, remarkably, financial advisers are allowed to recommend products to unsuspecting customers that are a grand deal for the adviser, but not for the person seeking advice.

Hard-Working Americans Who Play By The Rules Deserve Retirement Security

Doctors have a sworn obligation to keep the best interests of their patients' over all other interests, including their own. Lawyers have a professional responsibility to defend the best interests of their clients over any other interests, including their own. But, remarkably, financial advisers are allowed to recommend products to unsuspecting customers that are a grand deal for the adviser, but not for the person seeking advice. While most advisors keep their clients' interests first, some do not, and there has been number law to stop them. That's cost Americans an estimated $17 billion annually, and, to most people, makes number sense at all.

Yesterday, the Obama administration changed that by unveiling new guidelines that set up a professional and valid obligation for retirement advisors to allow advice that puts their clients' interests first.

The latest time the federal government made significant changes to defend Americans' retirement savings was in one thousand nine hundred seventy-fourth, when Congress passed the Employee Retirement Income Security Act (ERISA). The retirement landscape has changed dramatically since the one thousand nine hundred seventy's. Two of the biggest ways Americans rescue for retirement today -- four hundred one(k)'south and Individual Retirement Accounts -- didn't even exist when President Gerald Ford signed ERISA into law. New savings opportunities have increased, but so also has complexity, making retirement savings murkier and more challenging for advisors and retirees to navigate.

It'south long past time for consumer protections to capture up to modern realities.

The majority of retirement advisors allow responsible and sound advice to their clients. They already have their clients' interests at heart, which is why formalizing their best practices into a professional obligation isn't such a dramatic shift. Indeed, groups representing investors, investment professionals and experts love the Committee for the Fiduciary Standard support this regulation change. Many industry leaders consent that retirement advisors should be held to the highest valid and professional standards.

But that doesn't imply that these reforms aren't powerfully important. Because of outdated retirement laws, advisors can manage investors into products that earn free vacations, cars, bonuses, fees, and other perks for themselves, but that may be lousy for their clients. And the retirement advisors who keep their own personal financial interests ahead of their clients cost Americans billions every year. Older Americans who are closer to retirement are particularly at risk of suffering damages from horrible advice because they simply don't have sufficient time to recover from these losses.

The establishment of a new, higher standard for retirement advice comes at a critical time.

Americans are retiring later in their lives than ever before. Hardworking families struggling to create ends meet have a challenging sufficient time saving money for retirement. Over thirty % of Americans don't have any retirement savings. We know that in the wake of the financial crisis, the total cost of retirement savings accounts actually increased to a record high, but that retirement readiness for the average American steadily decreased. And disparities in retirement savings are both indicative of and exacerbate existing inequalities. More than half of lower income Americans don't believe a comfortable retirement is attainable, major gaps in retirement savings persist between women and men, and minority households are less likely to have retirement savings accounts than their white peers.

Americans who work tough and play by the rules deserve to be able to retire comfortably with the dignity and security they've worked so tough for. For something as necessary as a family'south retirement savings, there'south number reason the retirement services industry shouldn't be held to a standard love that of other professions handling such serious matters.

Fairness and opportunity don't necessity to be mutually exclusive.

DOL'south new Conflict of Interest regulations tag an necessary step toward making saving for retirement easier, fairer, and more safe for all Americans.

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