Rule would protect consumers by requiring financial advisors to put clients’ best interests ahead of profits
RALEIGH –Last week, Attorney General Josh Stein joined seven of his state attorney general colleagues in urging the U.S. Department of Labor to lift its delay in implementing a rule that would require financial advisors to put clients’ best interests ahead of their own. The rule would protect retirees and others who rely on sound advice from financial advisors from getting scammed.
The investment advice fiduciary rule was set to take effect April 10, but the Department of Labor delayed it by 60 days to June 9.
“People saving for retirement need good advice, not sales pitches,” said AG Stein. “This common sense rule is long overdue. This rule will make the clients’ interests – not the advisors’ profits – the top priority.”
The rule will require advisers to recommend retirement products that are in the customer’s best interest, as opposed to products that give advisers the best prize or commission. Retirement advice based on conflicts of interest costs investors $17 billion annually, according to a government estimate.
Previously, an agency analysis found that conflicting advice issues were widespread and cause serious harm to investment plan and IRA investors. The analysis found that investment agencies often arrange their compensation ahead of clients’ interests. The Labor Department issued the fiduciary rule on April 6 of last year to protect investors and address problems in the retirement investment advice market.
The letter is signed by attorneys general in the states of Hawaii, Illinois, Iowa, North Carolina, Oregon, Pennsylvania and Washington, as well as the District of Columbia.