Will “Everyday Americans” Lose Potential Protections re Investment Advice?
NPR had a good recent summary of the politics behind opposition to full implementation of fiduciary duty standards for investment brokers in providing retirement advice:
Over the past two weeks, the Trump administration has taken steps to delay and perhaps scuttle a new rule designed to save American workers billions of dollars they currently pay in excessive fees in their retirement accounts.
The Obama administration spent 5 years crafting the rule through the Labor Department. It requires that financial advisers and brokers act in their customers’ best interest when offering them investment advice for their workplace retirement accounts. Firms must comply by April [2917 under the current rule].
As the commentary pointed out, early-on Trump pledged to support the interests of ordinary working Americans and to take on Wall Street:
In his inauguration speech, President Trump talked about giving America back to everyday working Americans. In one of the more memorable moments, the president said, “The forgotten men and women of our country will be forgotten no longer.”
The fiduciary duty rule for investment brokers directly signals the tension between President Trump’s pledge to working Americans and his career-long focus on big business.
AARP supports the rule, recognizing that the U.S. has an “under savings” problem. Distrust of investment advisers plays into the reluctance of ordinary Americans to engage in professionally-assisted planning for the future. Will AARP rally retirees to resist repeal or delay of the fiduciary duty rule?
For more, read or listen to Trump Moving to Delay Rule that Protects Workers from Bad Financial Advice.Trump Moving To Delay Rule That Protects Workers From Bad Financial Advice and White House to Investors: Put Savers’ Interests First.
Warren Buffett has been counseling — for years — to avoid high fee “experts” for investment advice, recommending the use of index funds instead. See e.g. Newsday‘s “Warren Buffett Says Don’t Waste Money on Investment Fees.”