President Joe Biden wants to safeguard your retirement savings with a new rule that would require a range of financial professionals to work only in your best interests.
The so-called Retirement Security Rule, proposed by the Department of Labor (DOL) on Tuesday, aims to close “loopholes” in current law that allow advisors to recommend investments that pay higher commissions but aren’t’ necessarily the best options for their clients. When this happens, Americans lose with lower returns and higher “junk fees,” the DOL said.
Those junk fees are the “hidden costs” of these types of financial conflicts in retirement plans that saddle clients with higher expenses and smaller returns, Lael Brainard, director of the White House National Economic Council, told reporters in a call.
The new rule would increase retirement savers’ returns by between 0.2% and 1.2% a year, potentially boosting retirement savings by up to 20% over a lifetime, the White House said.
Opponents argue the new rule would increase regulatory burdens and costs, resulting in fewer advisors and options for investors, especially those with smaller account balances.
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“The rule will only increase retirement insecurity and result in millions of lower- and middle-income workers and retirement savers losing access to needed financial advice,” said Wayne Chopus, president and chief executive of the industry organization Insured…
