PBS Frontline had a special a month ago about investing and retirement. They focused on fiduciary responsibility and fees related to investing.
The 52-minute video can be seen at: http://www.pbs.org/wgbh/pages/frontline/retirement-gamble/
They state that America is facing a retirement crisis. One in three Americans has no retirement savings at all. One in two reports that they can’t save enough. On top of that, we are living longer, and health care costs, as we all know, are increasing.
They report that eighty five percent of all financial advisers and financial planners are really just brokers or salesman. Their incentive is to sell you a product that makes them a higher commission, not necessarily a product that maximizes your chances of saving more. Only 15 percent of advisers are “fiduciaries” — advisers who by law must operate with your best interests in mind (AIO Financial is a fiduciary).
Last year, the Obama administration proposed a rule to mandate that all financial advisers would have to adopt a fiduciary standard when it came to employee retirement accounts such as your 401(k) or IRA account. The financial services industry, which today manages something upwards of $10 trillion of our retirement nest eggs, thought this was a bad idea and pushed back hard. Scores of their protest letters poured into the U.S. Labor Department, the branch of our government responsible for regulating employee retirement accounts.
“As long as they don’t run away with our money or invest it in a Ponzi scheme, they have little in the way of accountability to us when something goes wrong. And even then it can be hard to fight back.”
Congress, too, was hit with a furious lobbying campaign. This would be way too expensive, the industry said; if we have to provide such a standard of service, we will either have to pack up and find another business line, or have to pass the increased costs on to our customers. The Obama administration pulled their proposal last fall.
A recent AARP study reported that 70 percent of mutual fund savers were not even aware that they were paying any fees at all.
Is there hope for change? The Labor Department says they plan to reintroduce a new fiduciary rule this summer that will force the financial services industry to think of us first when it comes to retirement. We’ll see how that goes.
To discuss fee only financial planning with a certified financial planner please contact Bill Holliday, CFP – firstname.lastname@example.org or 520-325-0769.