Review & Outlook

Our take on the investing, financial, & economic themes of the day

Brokers and the 401(k) Fiduciary Problem

27 January, 2015 by Matthew O'Brien, Ph.D. in Commentary

Since I knocked Bloomberg’s reporting in my previous post about Tesla, let me reference an important article that the news service ran recently, Billions in Lost 401(k) Savings, Abusive Brokers Under White House Scrutiny.”  Right now the Department of Labor is deliberating about whether to impose a fiduciary duty on brokers who advise retirement plans and IRAs.  An advocacy website, which is produced by a coalition including the AARP, the AFL-CIO, and the Consumer Federation of America, is supporting the imposition of a fiduciary rule.

It would be a great win for ordinary investors if they could be assured to receive genuine fiduciary advice from their wealth managers, financial planners, etc.  Unfortunately, it’s probably more likely that Wall Street’s lobbying effort will ensure that brokers still get to operate without having to act in their clients’ best interest.