Earlier this week, President Obama announced a new initiative to end conflicts of interests and minimize hidden fees in connection with retirement savings. This is the White House response to the US retirement crisis with too few people saving for retirement and too many saving not enough.
Currently, US citizens have hard time navigating through a plethora of complex financial products and services marketed and sold to them by financial firms. As a result, they turn to brokers and other advisers to seek assistance. However, a loophole in the law allows these advisers to recommend investments that generate lucrative commissions for them, even though the clients get stuck with high fees, subpar performance, and unacceptably risky products.
"We’re not suggesting that everyone who gives retirement investment advice is taking advantage of their clients, since many advisers do act in their client’s best interest. But, because the law does not require them to do so, far too many do not. That’s why the President’s action is so important," said Dennis Kelleher, Better Markets CEO in a statement.
In the months to come, the Department of Labor will launch a public-feedback process. US citizens will be able to comment on the best approach to modernizing the rules on retirement advice and set new standards.
Read more on Better Markets website.