Earlier this year, Donald Trump ordered the Department of Labor to reconsider the Obama administration’s retirement savings protections due to begin taking effect in April, with an eye toward revising or completely eliminating them.
This protective ruling is based on two core ideas. First, if you are an individual investing for retirement, your best interests should come first. Your financial interests should not take a back seat to the financial interests of your financial adviser. And, the second idea of the ruling maintains that how your adviser gets paid cannot conflict with your best interests.
What Eliminating These Protections Could Mean For You
<>bYou may lose hard-earned retirement money.
The Labor Department created the new retirement investor protections because lots of evidence showed working people and retirees were paying a huge price for conflicted investment advice through higher fees and worse returns. If you continue to live with that conflicted advice, you could end up with about 25% less in retirement money over 35 years of investing than if you were getting recommendations from someone who is paid to work in your best interest. This easily could amount to tens, if not hundreds, of thousands of dollars less for you when you retire. Or, you might have to work longer to make up for it.
You won’t automatically be able to trust your retirement investment adviser.
Trusting the wrong person to help you make good decisions about your retirement investments can cause you deep and permanent financial harm. If the Trump administration gets rid of or weakens the retirement investor protections, it will continue to be your job to figure out whom you can trust—that is, who is a “fiduciary” legally required to act in your best interest versus who is just a salesperson getting paid with commissions and kickbacks.
AFL-CIO President, Richard Trumka had this to say after the initial Fiduciary protection ruling. “We know that financial industry opponents of the rule will continue their efforts to prevent it from being enacted. The AFL-CIO will be watching to see how members of Congress respond to their entreaties. This rule is critical to promoting retirement security for working men and women. It means we will have more of our hard-earned funds available for a secure and dignified retirement.”
Always Work With a Respected Fiduciary Financial Adviser
Even though a U.S. federal judge upheld the Obama-era rule, the case could still be appealed to a higher court. So, for now, the protective ruling is alive. However, the case is not closed. In the meantime, whether the ruling is ultimately done away with or not, you don’t have to be the one to suffer. If you have a plan stick with it. If you don’t have one, find a respected fiduciary investment adviser to work with immediately. Working with a fiduciary financial adviser can at least assure you that your interests are above theirs.