U.S. weakens retirement advice rule, responding to industry

[Eugene]

Source: Reuters

A new U.S. rule aimed at protecting retirement savers from profit-hungry brokers turned out to be much weaker than an initial proposal after the Obama administration bowed to pressure from the financial services industry.

The rule, announced by the Department of Labor on Wednesday, sets a so-called fiduciary standard for financial brokers who sell retirement products, requiring them to put clients' best interests ahead of their bottom line. The language is tougher than an existing rule that only requires brokers to ensure products are "suitable."

However, the Labor Department did compromise with the industry on a range of provisions. Unlike the draft proposal, the final rule does not restrict brokers from pushing proprietary products, splitting revenue with creators of funds they promote, or recommending risky, high-fee investments in alternative assets and certain annuities.

Brokers also got more time to implement the changes, which they said were costly and difficult. The rule will now take full effect on Jan. 1, 2018, compared with an eight-month compliance deadline in the Labor Department's initial proposal.

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Read more: http://www.reuters.com/article/us-usa-brokers-fiduciary-idUSKCN0X3122

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Homepage | Wed Apr 6, 2016 4:56pm EDT
WASHINGTON | BY SUZANNE BARLYN AND LISA LAMBERT

[Plucketeer]

1. This is only one of the myriad reasons

we need Bernie Sanders in the White House. He's told the damned "Money Changers" that they have good reason to fear him. I hope they're losing lots of sleep of late!

[Zira]

9. +10000

[KPN]

14. You read my mind!

[FairWinds]

2. Well Yes Mr./Ms. Pluck . .

Here is a great example of what a REAL progressive in the

White House could do.

As usual, Obama continues to deeply disappoint. This is all on him.

I'd demand that all Prez candidates weigh in on this - it totally

shows how the system in broken.

[Hoppy]

12. I am not disappointed in Obama since I expected little from him in the first place.

I expect less from Hillary. However, if she wins, I will buy stock in G.E. General Dyn. Raytheon, and Halliburton. Gee. Maybe I should vote for Hillary.

Go Bernie ! We don't need any more wars.

Go Elizabeth !


8 years ago, our best hope was Kucinich. When it got down to Hillary and Obama, I knew it was over for the hope of anything good.

[Plucketeer]

13. I think it's hard to IMAGINE

what 8 years of Kucinich would have wrought. He could've been stonewalled as much as Obama's been. Of course, if we suspect things Right, the mere fact that Dennis is white might have bought him some wiggle room. Hurts me to say that, but it's just the reality of thinbgs.

I'm going to confess that I voted for Ronnie both times - for reasons such as you jestfully propose - I was a member of the MIC workforce. So a vote for St. Ronnie was a vote for my job security. Of course, I regret that choice now - and I've come totally round the compass since the 80s!

[FairWinds]

22. Yup, I guess I should have known better, me . .

being a political scientist and all.

Obama ran as a progressive, and I believed him - silly me.

Even back during the 2008 campaign he flat-out lied about a NAFTA re-do.

He's done a few progressive things, but not very damn much.

[PSPS]

3. As usual, "the Obama administration bowed" yet again.

[NCjack]

26. Another example of the administration's "how may I appear to help you poor folks". nt

[SoapBox]

4. Well what the fuck, Obama???

Good gawd...I have no words.

Screw the "industry"!

[Recursion]

8. You didn't follow this, did you? This is a much stronger consumer protection rule than we had before

What got weakened was a suggestion Labor had made last year. This new rule is an improvement from the current rules.

[FairWinds]

23. Yes, I did follow this issue . .

and YES, Obama sold us out again.

[Odin2005]

5. I am so sick of this spineless BS.

[Doctor_J]

6. That's our president, showing his true liberal lame duck self

the Obama administration bowed to pressure from the financial services industry

Most corporate president ever. Although Hillary will obviously outdo him should she make it to the white house

[Zira]

10. Yep, and we must stop her again.

[Recursion]

7. Strengthens, not weakens. The current rule is ERISA, and this is much stronger

But, other than having an Orwellian headline, this article is pretty good. What it's weaker than is a suggestion they made last year.

[KPN]

15. Strengthens, but not enough.

Some call this compromise, some call it capitulation, others call it corruption.

Granted, corruption will never be eliminated -- it's human nature. But the current level of corruption in governance is unprecedented in our lifetimes. And unacceptable.

While you seem to accept it, more and more do not.

[Recursion]

16. So you're against strengthening ERISA?

That's horrifying. Do you just hate retirees? What made you like that?

[KPN]

17. I'm against caving to corporate influence when it enables

predatory behavior.

Common sense and strength of conviction made me like that.

So you aren't? What made you like that?

[Recursion]

18. But, your jokes aside, you're really against strengthening retirees' protection?

How do you sleep at night?

[KPN]

19. Well, thank you.

Guess I would ask the same question of you ... because I just don't get how you ae okay with the level of corruption we have in our government, especially at the federal and State levels, today.

[Recursion]

20. I'm not the one arguing against these new stronger rules

That's you.

I find that incredibly irresponsible, personally, but we're all different.

[KPN]

21. Obviously.

[PATRICK]

11. Why I give up on playing investment risk

One. The people thinking themselves expert on this play the game so much they are likely afraid to spend the money. Really, getting rich this way almost seems more dishonest than buying a Lotto ticket- if you like donating to the saintly state pols that way. My employer matches my donation up to 5%. I don't gamble that 100% away to earn a few per cent more and see it wiped out from from time to time. And no one advises you of a fairly obvious coming downturn that does just that. In the long haul you will keep earning. You will also be dead, perhaps in the middle of rebuilding. The rationalizations about why this isn't "smart" sound very much like the pressure you get to join a Ponzi scheme like chain letters.

The comes trust about middle men making sure money off the chance you might be making money. And we are all so smart and mature in this game. Really. This seems like it's better than begging those same people with a tin cup on the sidewalk, but only by indulging in affordable illusions.

[Yupster]

25. So do you just leave your 100 %

in the money market option?

[PATRICK]

27. I leave it

in the government Thrift Savings Plan G Fund until they look like getting raided by the privateers as it once threatened under Bush Junior. Then I check out my Credit Union for anything else.

[bemildred]

28. +1. nt

[Yupster]

24. Bottom line

Companies will be pushing investors toward fee based wrap accounts where the broker makes the same amount regardless of the investment rather than the commission based system many now offer. Wrap accounts have become much more popular over the last decade as its a way for the company to know what its making every month rather than having to rely on commissions.

In a commission based system, you might buy 100 shares of Coca Cola stock, or a corporate bond and leave it there for 20 years. You would pay a commission to buy it (as high as 2 % depending) but then you'd pay nothing for the next 20 years while you held it. With the wrap account you'll pay a fee every year (generally around 1 %). This would be cheaper for those who trade all the time, but way more expensive for people who buy and hold.

The cost will go way up for the investor who switches. The brokers will get richer.

The government will feel like they solved another problem.