Time to Close Wall Street’s ‘Retirement Advice Loophole’

[Omaha Steve]

http://www.aflcio.org/Blog/Political-Action-Legislation/Time-to-Close-Wall-Street-s-Retirement-Advice-Loophole




01/15/2015 Mike Hall

There is a loophole in the rules that govern Wall Street brokers and financial firms that provide retirement investment advice that can drain away thousands, or even tens of thousands, of dollars of hard-earned savings from a single retirement account. Today, a coalition of senior, union and consumer groups launched a new website—SaveOurRetirement.org—to mobilize support to close the “Retirement Advice Loophole” through a new rule the U.S. Department of Labor is trying to adopt.

The way workers save for retirement has changed dramatically over the past decades. With the decline in traditional pensions, more and more workers depend on 401(k) plans and individual retirement accounts (IRAs), and they frequently seek investment advice from financial professionals. But the rule governing when that advice must be solely in the worker’s interest, free from conflicts of interest, has not been changed since 1975—and many loopholes exist.

The “Retirement Advice Loophole“ allows Wall Street brokers and financial firms with major conflicts of interest to provide investment advice that serves their own interests instead of what’s best for their clients.

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For example, they can sell financial products that pay large commissions but hurt their clients with unnecessary fees, poor returns or excessive risks. Millions of Americans are affected by this loophole every year without even knowing it, and it is draining away their retirement savings.

FULL story at link.