New Biden target in junk fee crackdown: retirement advisers

The proposed Labor Department rules require retirement plan providers to only sell commodities and insurance products, such as annuities, to clients when doing so is in the customer’s best interest.

They would also hold Wall Street to a higher standard for the advice they provide when people roll over assets from an employer plan to another account, such as employee-sponsored 401(k) to an Individual Retirement Account.

“Financial advisors should put savers best interest first, and not sell them lower returning products in order to maximize their own fees,” Lael Brainard, director of the White House National Economic Council, said. headtopics.com

“When a retirement saver pays for trusted advice that is actually not in their best interest and comes at a hidden cost to their lifetime savings, that’s a junk fee,” Brainard said.to crack down on junk fees – or extra charges – customers pay when booking concert tickets, hotels and air fares. Taking on “junk fees” gives Biden and his allies fodder to show they are helping people tackle costs as many Americans are dissatisfied with his economic stewardship.

The proposed Labor Department rule is designed to force brokerage firms to put investors’ needs first, instead of selling products that generate a higher payout for them. Securities and Exchange Commission rules require advice to purchase securities like mutual funds be in the saver’s best interest, but that authority does not extend to commodities or insurance products like fixed index annuities, which are often recommended to retirement savers. headtopics.com

The proposed rule would ensure that retirement advisers must provide advice in the saver’s best interest, regardless of whether they are recommending a security or insurance product and where they are giving advice, senior administration officials said.

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