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May 6, 2015

What the Labor Dept's Fiduciary Proposal Means for Banks

“The financial industry and the White House are gearing up for a fresh battle this spring over investment advice for retirement savings.

“The Department of Labor issued a draft proposal earlier this month that would require financial advisers to provide retirement savings advice that is in a customer’s “best interest” in an effort to minimize conflicts of interest. President Obama and some lawmakers, including Sen. Elizabeth Warren, D-Mass., have backed the rule, but the industry warns that it may prove too complex and could hinder access to retirement advice.”

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“The industry’s challenge will be to oppose that narrative in a way that highlights its concerns with the proposal. That could prove particularly difficult at a time when so many Americans remain concerned about their own retirement savings and that of their parents.

“Dennis Kelleher, president and chief executive at Better Markets, an advocacy group, pointed to a recent study by the White House’s Council of Economic Advisors that estimated so-called conflicted advice cost consumers $17 billion per year.

“We have a massive retirement crisis ahead — there are too few people saving and those who are saving aren’t doing enough,” he said. “You have a tax-subsidized system that’s enriching brokers at the expense of retirement savers. Can you think of anything more corrosive to public confidence than that?”

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Read the full American Banker article by Victoria Finkle here

 
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