- The Washington Times - Wednesday, April 6, 2016

The Obama administration announced new regulations Wednesday requiring retirement advisers to always act in the best interest of their client, a move the White House said will save families $17 billion per year but critics say will hurt ordinary investors by making financial advice more costly.

The new rule — known as the fiduciary standard — is aimed at eliminating conflicts of interest among financial advisers who steer clients into investments that produce weaker returns for investors but bigger fees for brokers.

Treasury Secretary Jack Lew said the new regulations are “an important step toward ensuring that Americans who invest their hard-earned retirement savings receive advice that is in their best interests.” The president’s Council of Economic Advisers estimates that investors lose as much as $17 billion annually due to financial advisers who are more concerned about reaping big fees than getting the best returns for their clients.

The industry, Republican lawmakers and conservative analysts say the action will hurt investors of modest means by making financial advice more expensive, due to extra paperwork and other compliance requirements.

“The fiduciary rule is like Obamacare for your IRA and 401(k),” said John Berlau, a financial policy specialist with the Competitive Enterprise Institute. “If you like your brokers and investments, you might not be able to keep them.”

Mr. Berlau said the regulations will create a “guidance gap” by deterring companies from serving middle-class investors, and he estimated the result could cost $80 billion in lost savings annually.

House Speaker Paul D. Ryan, Wisconsin Republican, has said the rule could hurt millions of middle-class investors because it will “raise costs and limit options for people seeking advice on their retirement planning.”

Financial Services Institute President and CEO Dale Brown expressed concern that the rule is unnecessary.

“There is no compelling evidence this rule is necessary to achieve a uniform fiduciary standard, and [the Labor Department’s] own analysis fails to make the case,” he said, adding that his group is still studying the rule’s impact.

Firms have until January 2018 to comply fully with the new rule.

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