President Donald Trump is delaying a series of rules that require financial professionals to put their clients’ best interests first when giving advice on retirement investments. It has been staunchly opposed by the financial services industry.
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The rule requires financial advisers to act in the best interests of their clients in retirement accounts. “Instead of doing favors for the big bank CEOs he invited to the West Wing this morning, President Trump should stand with working families by protecting this critical rule”. Mr. Klayman continues, “Trump’s actions today seek to roll back all the progress that was made since the financial crisis, and is awful news for investors”.
President Trump continues his streak of throwing middle class Americans under the bus – the very people he promised to protect on the campaign trail.
Mr. Trump also is expected to sign an executive order for a re-examination of the Dodd-Frank Wall Street Reform Act and its Volcker Rule that restricts banks from making certain speculative investments.
Some industry groups applauded the directive, including the Financial Services Institute, Financial Services Roundtable and Insured Retirement Institute, arguing that the administration should take the time to get it right.
Make investment recommendations that are consistent with the goals, objectives, and risk tolerance of their clients.
President Barack Obama’s Labor Department spent six years writing the details of how exactly the fiduciary rule would work, publishing a finalized version last year.
The requirement to act in a client’s best interest means, in many cases, that the practice of charging commissions on every trade would be replaced by a set fee for a broker as a proportion of a customer’s assets. The fiduciary rule would save affected middle-class families tens of thousands of dollars for their retirement over a lifetime of savings. Industry groups have sued the Department of Labor in an attempt to block the rule. An executive order outlines seven core principles for regulation of the financial system: promoting independent consumer choices, preventing bailouts, fostering economic growth, promoting global competitiveness, advancing USA interests in worldwide negotiations, tailoring regulations and ensuring regulatory accountability. The Wall Street Journal quotes White House National Economic Council Director Gary Cohn, whose comments appeared to be the primary source for the reports, saying the rule limits consumer choice.
“It ratchets things up a little bit more when it comes to policing the activities of these managers who are managing the retirement monies of scores of millions of American workers who will one day be retirees”, he said.
Even though President Trump has suspended the fiduciary rule, IRA investors can still take advantage of its intended benefits by taking on a more active role with their financial advisor.
The Trump memorandum directs the labor secretary to delay implementation of the rule, review it and propose further action.
Cohn promises his plans to gut the fiduciary rule are just the beginning of Trump’s offensive against Dodd-Frank.
“We think that they have exceeded their authority with this rule and we think this is something that is completely overreaching”, the official told reporters at a briefing on Thursday.
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“We need to remake messages to better speak to investors and leaders outside Wall Street and Washington”.
