If you pay someone to help you manage your retirement account (like your IRA) under the current law, a perfectly acceptable procedure is for them to:
- Look at all reasonable alternatives
- Pick the alternative with the highest commission for the advisor (meaning the highest cost to you)
- Tell you that the highest cost alternative is the best for you
The Obama administration has recently finalized some rules to mandate that if someone is paid to advise you on how to invest your retirement money, that they have to tell you what they actually believe is in your best interests.
On Thursday, the Republican controlled House of Representatives voted to block this change. They claim that it will reduce the profits of the financial industry. While they are correct about that, these rules will increase the retirement security of those Americans who are those most in need of a secure retirement.
Blocking the new rule will be bad for American retirees and bad for the financial services industry. By allowing financial advisors to put their own interests ahead of their clients, the few bad actors will be unfairly competing with the many ethical financial advisors who actually do a good job. When those bad actors are rightfully shamed, the industry at large will be blamed for the actions of the worst.
We suggest that congress should NOT block the new rules.