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Retirement Planning should not be only a Luxury for the Rich

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Rep Scott Garrett promoting North Jersey Business

Rep Scott Garrett on Department of Labor’s Fiduciary Rule: Another roadblock between people and their financial goals

Apr 6, 2016
the staff  of the Ridgewood blog

Ridgewood NJ, Rep. Scott Garrett (NJ-05), Chairman of the Financial Services Subcommittee on Capital Markets and Government-Sponsored Enterprises, issued the following statement after the Department of Labor (DOL) announced their finalized rule for retirement advisors—known as the “fiduciary rule”—that could turn retirement planning into an unaffordable luxury. The hyper-partisan rule was unveiled at the liberal think tank, the Center for American Progress, with a group of Democrat lawmakers.

“Saving for the future shouldn’t be a privilege for the wealthy, and Washington doesn’t need to put another roadblock between people and their financial goals. By ignoring the advice of the SEC and Congress, the DOL’s rule will increase the cost of retirement advice for lower- and middle-income Americans while creating a preferred class of rich investors. I will continue to fight for everyone’s right to get good financial advice because—unlike this administration—I believe in the people of New Jersey to make the best choices for their families and their futures.”

The DOL fiduciary rule could result in many people finding out that their accounts are too small to qualify for professional advice because providers will be forced to only service large accounts. In many cases, minimum account balances will increase substantially, effectively shutting down the ability of average investors to receive advice. It could also limit access to financial products that people are able to utilize when developing a retirement savings portfolio.

In October, Congressman Garrett voted for H.R. 1090, the Retail Investor Protection Act, which would block the DOL’s rule and ask for advice and expertise from the Securities and Exchange Commission before implementing any new rules.

6 thoughts on “Retirement Planning should not be only a Luxury for the Rich

  1. Actually the rule released Wednesday made concessions for many of the initial proposals that were very complicated. The final is actually quite fair and gives a good amount of leadtime for implementation. It promotes disclosure of conflict of interest, what is in the best interest of the client as well as transparency of initial and ongoing costs of investments. What’s wrong with that? And there are tons of hybrid and robo advisors now. As usual, the idealogue got it wrong.

  2. He’s right of course!

  3. 218… here’s the link…please tell us why Garrett is right…

  4. The WSJ has a completely different take than Paul Smith. Today’s editorial (opening paragraphs below) point out that this set of rules is slanted to capture investment accounts with the goal of making small and medium sized savers invest in government run plans. Follow the money — those government run plans are going to lean toward investing in government paper with associated pitiful returns. That’s the conflict of interest that’s not being disclosed.

    From the editorial…
    President Obama’s regulators aren’t slowing down, alas. And on Wednesday they unveiled another part of their plan to push Americans out of private investment accounts and into government-run plans.

    The Department of Labor says its so-called fiduciary rule will make financial advisers act in the best interests of clients. What Labor doesn’t say is that the rule carries such enormous potential legal liability and demands such a high standard of care that many advisers will shun non-affluent accounts. Middle-income investors may be forced to look elsewhere for financial advice even as Team Obama is enabling a raft of new government-run competitors for retirement savings. This is no coincidence.

    Labor’s new rule will start biting in January as the President is leaving office. Under the rule, financial firms advising workers moving money out of company 401(k) plans into Individual Retirement Accounts will have to follow the new higher standards. But Labor has already proposed waivers from the federal Erisa law so new state-run retirement plans don’t have the same regulatory burden as private employers do.

    This competitive advantage could be significant. Last month the board of California’s new “Secure Choice” retirement plan wrote to state legislators about their “exciting win” in Washington. They reported that employers enrolling workers in the new government-run plan “would have no liability or fiduciary duty for the plan.” Score! The California bureaucrats added that “we have been given the green light to auto-enroll workers into an Individual Retirement Account (IRA).”

    Meanwhile, there are only losses for private competitors. The final rule Labor Secretary Tom Perez unveiled Wednesday is being marketed as less onerous than an earlier draft. Thus much of the financial industry is going to take a few weeks to decide on its response. But the main question is exactly how many billions of dollars in costs and lost opportunities will be visited upon investors. And how big the incentive will be to seek government options…

    And so on

  5. look at the rule… quite simple… clients best interest and transparency in cost. and sure, the WSJ wants transparency for clients. Instead of copying and pasting read the hilites of the rule.

  6. Looking at the rule, it’s not a bit simple. Pages and pages of legalese. Just another step along the road to nationalizing the financial industry. Only the naive would assume a federal rule (especially nowadays) has no hidden agenda.

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