A new coalition of labor unions and consumer advocates has formed to help generate support for the Department of Labor's anticipated new fiduciary standard, which would make broker-dealers beholden to the high standards of care established under the Employee Retirement Income Security Act.
A newly launched website, SaveOurRetirement.com, includes a petition seeking to gather 1,000 signatures in support of closing what the coalition calls the "retirement advice loophole" with the implementation of a universal fiduciary standard.
As of mid-day Friday, its second day in circulation, the petition had garnered 16 signatures — three from outside the U.S.
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Language on the website seems to hope to appeal to the public's distrust of the financial services industry.
"Wall Street banks, brokers, mutual funds, and insurance agents with major conflicts of interest are allowed to provide investment advice that put their own interests ahead of what's best for their clients," it says.
As a result, millions of dollars in Americans' retirement saving accounts are drained every year, it says.
"The losses can be devastating, just as a colony of termites quietly eats away an entire house," the site says.
The "solution" to that problem, says the site, rests in the hands of the DOL.
"A good rule will ensure that all financial professionals who offer retirement advice must make recommendations designed to serve your best interests by keeping your costs low, recommending sound investment, and protecting your retirement nest egg from unnecessary risks."
The site takes aim at IRA rollovers from 401(k) plans and variable annuities, which "lock up your money for years." It makes no mention of the guaranteed income streams annuities provide.
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The site also bemoans the diminished place of defined benefits in retirement.
The coalition consists of the AARP, American Federation of State, County and Municipal Employees, the AFL-CIO, Americans for Financial Reform, the Consumer Federation of America, and the Pension Rights Center, according to a press release.
Industry opposition to the DOL's plans has been high. Among others, the Securities Industry and Financial Markets Association and the Financial Services Institute say the proposal could hurt the public's access to quality financial advice.
"Investor protection is of utmost importance to our members who provide affordable financial advice and services to Main Street Americans every day. We look forward to reviewing the Department of Labor's re-proposed rule when it is released," Robert Lewis, vice president of legislative affairs for FSI, said in a statement after the consumer group campaign was launched.
The DOL has set a deadline for releasing the new rule for this month, though it may be months or longer before any new regulations go into effect.
Republican Senator Orrin Hatch, chairman of the Senate Finance Committee, has said the DOL has no business writing such a rule, and has written provisions into the SAFE Act that would leave jurisdiction over ERISA prohibited transactions with the Treasury department and the SEC.
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Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
