Saving for retirement: Obama proposal sets up Wall St. fight

[webfact]

Saving for retirement: Obama proposal sets up Wall St. fight
By JIM KUHNHENN

WASHINGTON (AP) — Tapping the anxieties of aging baby boomers, President Barack Obama on Monday called for tougher standards on brokers who manage retirement savings accounts, a change that could affect the investment advice received by many Americans and aggravate tensions between the White House and Wall Street.

The Labor Department submitted a proposal to the White House Monday that would require the brokers who sell stocks, bonds, annuities and other investments to disclose to their clients any fees or other payments they receive for recommending certain investments.

"If you are working hard, if you are putting away money, if you are sacrificing that new car or that vacation so you can build a nest egg for later, you should have the peace of mind of knowing that the advice you are getting for investing those dollars is sound," Obama said in a speech to the AARP, the retiree advocacy group. "These payments, these inducements incentivize the brokers to make recommendations that generate the best returns for them but not necessarily the best return for you."

The proposed rule, which could be months away from actual implementation, has been the subject of intense behind-the-scenes lobbying, pitting major Wall Street firms and financial industry groups against a coalition of labor, consumer groups and retiree advocates such as the AARP.

Americans increasingly are seeking financial advice to help them navigate an array of options for retirement, college savings and more. Many people provide investment advice, but not all of them are required to disclose potential conflicts of interest.

Under current rules, brokers are required to recommend only "suitable" investments based on the client's finances, age and how much risk is appropriate for him or her. The rules would make brokers handling retirement accounts obligated to put their clients' interests first.

"The challenge we have is right now there are no uniform rules of the road that require retirement advisers to act in the best interests of their clients," Obama said.

The Labor Department's proposal must now undergo an internal review by the White House budget office. After that, it likely will be put out for public comment for several months.

The administration first proposed a regulation in 2010, but pulled it back following an industry outcry that the proposal would hurt rather than help investors by limiting choices. Even some Democrats urged the White House to go back and redraw their plan.

To buttress the new effort, the White House on Monday released a 30-page report from its Council of Economic Advisers noting that an estimated $1.7 trillion of individual retirement account assets are invested in products that pay fees or commissions that pose conflicts of interest.

Obama cited academic studies that conclude investors who receive investment recommendations potentially influenced by conflicts of interest sustain a 1 percentage point lower return on their retirement savings, totaling losses of $17 billion every year to middle-class families.

Industry officials dispute those studies and say the industry is well governed by financial regulators like the Securities and Exchange Commission. They say the Department of Labor is ill suited to write rules best left to agencies more familiar with the financial industry.

"You have the Department of Labor, which really doesn't know this area," said Ira Hammerman, general counsel for the Securities Industry and Financial Markets Association, the brokerage industry's lobbying group. "Our concern is they are not going to get it right, just like they did not get it right in 2010."

AFL-CIO President Richard Trumka said the proposed protections are overdue, noting that much of the current regulatory regime was set before 401ks and IRAs gained prominence as retirement savings vehicles. He predicted a difficult path to a final rule, however, given the financial industry's opposition.

Meanwhile, the SEC is studying the broader investment advice industry to determine whether it should come under further regulations. Critics of the Labor Department effort say the Obama administration should leave the regulations to the SEC or it will risk limiting the advice available to investors with relatively small retirement savings.

"Investors benefit from choice; choice of products and choice in advice providers," SEC Commissioner Daniel Gallagher, a critic of the Labor Department approach, said in a speech Friday.

To confront industry criticism, the White House has drafted former Vanguard chief executive and founder John C. Bogle to lend his support to the administration effort. Bogle said the disadvantages faced by small investors are not due to bad intent by brokers but because of a system that rewards salesmanship.

"These things are very difficult to change, basically, the ethos of the whole industry," he said, in a call arranged by the White House. "It's not manipulative, deceptive and fraudulent; it's a gradual sapping of an investor return."
___

Associated Press writer Marcy Gordon contributed to this report.


-- (c) Associated Press 2015-02-24

[gk10002000]

I know the IRA and Roth folks got some requirements on them recently to fully disclose fees. I don't care what somebody recommends. One has to assume that anybody that recommends something to you but is NOT being paid by you is being paid by somebody else. Of course the advisor might be pushing a product or a stock or a bond. Gosh, they are salesmen!

[Pinot]

We graduate from school and are clueless about how to handle money. Most people don't know how to invest. It's not easy but it can be learned. To have standards in place for money managers only makes perfect sense.

The Republicans will fight all attempts to put in reasonable rules for a couple of reasons. The GOP is bought and sold by the financial industry. No regulations on anything is their motto. They hate social security. They want that money handled by Wall Street for their take. The other reason the GOP will fight the rules is that they never want to let Obama pass anything.

[NeverSure]

We graduate from school and are clueless about how to handle money. Most people don't know how to invest. It's not easy but it can be learned. To have standards in place for money managers only makes perfect sense.

The Republicans will fight all attempts to put in reasonable rules for a couple of reasons. The GOP is bought and sold by the financial industry. No regulations on anything is their motto. They hate social security. They want that money handled by Wall Street for their take. The other reason the GOP will fight the rules is that they never want to let Obama pass anything.

Business Insider JUL. 22, 2011, 2:57 PM

"One-third of the Obama re-election campaign's record-breaking second-quarter fundraising came from sources associated with the financial sector, the Washington Post reports.

That percentage is up from the 20% of donations that came from Wall Street donors in 2008, and contradicts reports that a growing Wall Street animosity towards the Obama administration may jeopardize his re-election bid."

Emphasis mine.

LINK

[BadtzBee]

http://www.vox.com/2014/7/30/5949581/money-in-politics-charts-explain

[puck2]

Business Insider JUL. 22, 2011, 2:57 PM

"One-third of the Obama re-election campaign's record-breaking second-quarter fundraising came from sources associated with the financial sector, the Washington Post reports.

That percentage is up from the 20% of donations that came from Wall Street donors in 2008, and contradicts reports that a growing Wall Street animosity towards the Obama administration may jeopardize his re-election bid."

Emphasis mine.

LINK

What a strange logic.

The big money changes the horses in elections - or more precisely: jumps on the winning horses - at the moment when it is obvious that the Rep-horses cannot win the race.

Guess why? But for the answer you need some logic.

Obamas call for tougher standards is fair and justified in order to protect the interests of the inexperienced clients. As proven in the past the ethos of those brokers isn't at it's best. The outcry of this lobby group shows that Obama is right to hit them on their fingers.

Look at the graph in #5. As @Pinot said:

The Republicans will fight all attempts to put in reasonable rules for a couple of reasons. The GOP is bought and sold by the financial industry. No regulations on anything is their motto. They hate social security. They want that money handled by Wall Street for their take. The other reason the GOP will fight the rules is that they never want to let Obama pass anything.

Edited February 24, 2015 by puck2

[PLW]

The days for Brokers to generate commissions friviously are coming to a close. Retirees over the years have lost billions of USD due to unnecesary trading and charging of fees. This will change the Wall Street money mill scheme.

[wabothai]

<script type='text/javascript'>window.mod_pagespeed_start = Number(new Date());</script>

The days for Brokers to generate commissions friviously are coming to a close. Retirees over the years have lost billions of USD due to unnecesary trading and charging of fees. This will change the Wall Street money mill scheme.

This may sound ignorant, but the world would be a better place without the Wall Street scam and scemes. They, the greedy and money hungry mob have made a bloody mass of it in the last 20 years and it will get worse.

Invest your money wisely !!!!!

Buy a hotel in Myanmar.

[ronrat]

The same thing is happening in Australia. About time someone took an axe to get the leeches out of this industry.

[rotary]

Problem now is that anything Obama backs the majority of the people will go the other way due to Obamas proven record of poor judgement calls.

[Srikcir]

<script type='text/javascript'>window.mod_pagespeed_start = Number(new Date());</script>

We graduate from school and are clueless about how to handle money. Most people don't know how to invest. It's not easy but it can be learned. To have standards in place for money managers only makes perfect sense.

The Republicans will fight all attempts to put in reasonable rules for a couple of reasons. The GOP is bought and sold by the financial industry. No regulations on anything is their motto. They hate social security. They want that money handled by Wall Street for their take. The other reason the GOP will fight the rules is that they never want to let Obama pass anything.

Business Insider JUL. 22, 2011, 2:57 PM

"One-third of the Obama re-election campaign's record-breaking second-quarter fundraising came from sources associated with the financial sector, the Washington Post reports.

That percentage is up from the 20% of donations that came from Wall Street donors in 2008, and contradicts reports that a growing Wall Street animosity towards the Obama administration may jeopardize his re-election bid."

Emphasis mine.

LINK

You may not have noticed but Obama doesn't need Wall Street donations for his re-election now. He curried Wall Street with economic recovery policies but with successfully recovering the US economy, he no longer needs their support. Wall Street must feel BETRAYED that Obama now has activlely aligned more of his policies towards anti-Wall Street Elizabeth Warren and other Democratic populists.

[Seastallion]

Business Insider JUL. 22, 2011, 2:57 PM

"One-third of the Obama re-election campaign's record-breaking second-quarter fundraising came from sources associated with the financial sector, the Washington Post reports.

That percentage is up from the 20% of donations that came from Wall Street donors in 2008, and contradicts reports that a growing Wall Street animosity towards the Obama administration may jeopardize his re-election bid."

Emphasis mine.

LINK

What a strange logic.

The big money changes the horses in elections - or more precisely: jumps on the winning horses - at the moment when it is obvious that the Rep-horses cannot win the race.

Guess why? But for the answer you need some logic.

Obamas call for tougher standards is fair and justified in order to protect the interests of the inexperienced clients. As proven in the past the ethos of those brokers isn't at it's best. The outcry of this lobby group shows that Obama is right to hit them on their fingers.

Look at the graph in #5. As @Pinot said:

The Republicans will fight all attempts to put in reasonable rules for a couple of reasons. The GOP is bought and sold by the financial industry. No regulations on anything is their motto. They hate social security. They want that money handled by Wall Street for their take. The other reason the GOP will fight the rules is that they never want to let Obama pass anything.

Speaking of horses....I watched this the other day and it is very interesting and very much to the topic at hand.

[Ulic]

Seems only reasonable to me.

[maidee]

in the country that thrives on their population to every increase there shopping habits & credit card spendings