What Trump's action on financial advisor rule means for retirement savers
The future of the聽, which was intended to benefit retirement savers, is in doubt after President Donald Trump called for its review Friday just two months before it was to go into effect.
The rule would have required financial advisors and brokers who provide advice for聽聽to be fiduciaries, meaning they must act in the best interests of their clients over their own. For example, it would have prohibited brokers from steering clients聽to products that didn鈥檛 suit their needs 鈥� such as those that charge high commissions.
What does this mean for you?
Trump鈥檚 directive puts聽consumer protections that were on the way for聽traditional聽and聽,聽401(k)s and some聽聽into question.
At minimum, this means consumers must聽do their own due diligence before hiring financial advisors and brokers. That includes聽聽before hiring them and choosing one that already acts as a fiduciary.
Consumers should also ask questions about聽, and be mindful that even small percentages can add up to tens of thousands of dollars over a few decades of saving for retirement.
And consumers can now invest through聽, or automated online advisors. These services聽use computer algorithms to manage assets for a fraction of what a human advisor would charge.
Why the review?
Trump鈥檚 action directs the Department of Labor to review the fiduciary rule, and some who applaud the move say it聽could be a preliminary step to killing the聽regulation altogether. The聽聽on the matter specifically mentioned this possibility.
At the signing, U.S. Rep. Ann Wagner, R-Mich., said Trump鈥檚 action was about Main Street. 鈥淲hat we鈥檙e doing is we are returning to the American people, low- and middle- income investors, and retirees, their control of their own retirement savings. This is a big day, a big moment for Americans who care to invest and save.鈥�
Within the financial industry, there has been opposition to the rule. Some industry officials聽argue it would restrict investor choice and increase costs without providing the intended consumer protection.
Many consumer advocates聽disagree, saying the delay could be a blow to consumers. 鈥淭he American investor needs protection from financial advisors who may not have their best interests at heart,鈥欌�� Julian Rubinstein, CEO and president of American Asset Management, a Florida-based advisor that manages more than 500 portfolios, said in a statement. 鈥淭his is like telling medical doctors not to practice the best medicine that they can.鈥�
Anna-Louise Jackson is a staff writer at NerdWallet, a personal finance website. Email:聽ajackson@nerdwallet.com.
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