Insurance lobbyists block federal crackdown on costly retirement advice
I am heartbroken to read that the financial services industry has blocked the new law by the Dept of Labor that requires Financial Advisors to put retirees’ needs first — above lucrative commissions.
Throughout their careers, retirees work hard to build up their 401(k) or 403(b) accounts. Unfortunately, a loophole in the federal law, the Employee Retirement Income Security Act (ERISA), leaves them vulnerable when they roll over their retirement savings from their employer’s plan. Financial advisors often earn substantial commissions by selling these retirees financial products called annuities.
Many retirees unknowingly lose hundreds of thousands of dollars when their financial advisors recommend annuities instead of more cost-effective options like index funds. This is because, due to the ERISA loophole, advisors do not have to act as fiduciaries in these cases. The proposed law would have imposed new oversight on the financial services industry, requiring more advisors to act as fiduciaries. This would mean they could face legal actions, tax penalties, and other consequences if they failed to prioritize their clients' needs over their own commissions.
In my retirement optimization workshops, I often see K-12 teachers who suffer financial losses due to being sold high-fee annuities. Unlike 401(k)s, K-12 403(b) plans are not covered by ERISA, which means teachers are particularly vulnerable to these predatory practices. It’s disheartening to see educators being exploited by advisors who prioritize their own financial gain over the teachers' retirement security.
My goal is to empower you with the knowledge to make informed financial decisions that are in your best interest. The recent defeat in protecting retirees from non-fiduciary advisors highlights the need for vigilance. Educate yourself to avoid being misled. All of the people that I’ve worked with were unaware they had been sold annuities.
To help you understand the implications of working with financial advisors who are not fiduciaries and sell you annuities , I’ve prepared two case studies:
“Guaranteed” Not to Lose Money in the Stock Market? What’s the Catch?
Don’t You Want a Safe Retirement with “Guaranteed Income”?
These case studies will illustrate the true cost of the financial products being pitched and help you make more informed choices for your retirement. In both case studies, the financial advisor never mentioned the word annuity.
NOT FINANCIAL ADVICE
The information contained in this article is for informational purposes only and shall not be understood or construed as financial advice. I am not an attorney, accountant, or financial advisor, nor am I holding myself out to be. I do not accept any fees or commissions from anyone or any financial institution.
I’d love any feedback on these articles.
