WASHINGTON, D.C. — Today AARP Executive Vice President Nancy LeaMond praised the announcement of a final rule by the U.S. Department of Labor (DOL) that updates requirements for providing financial advice to individual retirement plan savers. Americans saving for retirement currently lose an estimated 6 to 17 billion dollars per year due to bad investment advice. Many advisers already abide by the higher standard.
Those who managed to save for retirement with smaller account have the most to lose from the status quo and the most to gain from the proposed rule. Too many retirement savers currently pay fees that are too high or are invested in products are not in their best interest. While some high-cost advisers may decide not to serve small accounts under a best interest standard, there are many investment advisers currently serving small savers and small businesses as fiduciaries who can take on more clients, and who offer low-cost high quality advice. This is particularly important to Mainers as our average retirement savings are fairly small.
Most people have to rely on money saved over years of work to fund their retirement, and often this money is accumulated through a 401(k) plan at work or some other type of investment. Long gone are the days when a guaranteed pension gave workers financial security in retirement; today, only one in five workers has access to such a plan. This means workers have to take on the risk of investing, which is a scary proposition. Investment losses can be devastating late in life, as there aren’t decades of work ahead to replace it.
Mainers work hard for their money and deserve a new standard of accountability to help them choose the best investments for themselves, their families and their future. Along with millions of Americans, they depend on 401(k)-style plans for their retirement savings. These plans allow workers to invest a portion of their paycheck before taxes are taken out. Such plans often involve complex financial decisions, so many of us have to use and trust investment professionals for guidance.
Some of us have retirement investments. Since investing can be complicated and time consuming, many folks have investment advisers. Maybe your adviser manages your retirement 401(k) accounts or your IRA. We want to trust that these advisers are acting in our best interest, that they're not gambling with our future. When someone else is handling your hard-earned savings you have to trust that they're going to be as smart with it as you would be.
Mainers work hard and deserve the peace of mind of knowing their retirement nest eggs are invested soundly. Unfortunately, millions of investors across the country may have something to worry about - a loophole in the law that could be sapping their savings.
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