US President Obama goes tough on Retirement Scheme Brokers

Washington: US President Obama used his weekly address to focus on new rules he’s proposing to ensure all hard-working Americans retire with dignity.

The proposed rules take aim at U.S. brokers and financial advisers to reduce conflicts of interest and “hidden fees” that cost Americans billions of dollars in retirement savings every year.

In proposing the rules, Obama said he sought to protect Americans from being steered into costly retirement investments that produced high commissions for brokers but low returns for investors preparing for retirement.

“Right now, there are no rules of the road. Many financial advisers put their clients’ interest first – but some financial advisers get backdoor payments and hidden fees in exchange for steering people into bad investments,” Obama said.

The White House said the proposals target fees and payments that on average lead to a full percentage point lower annual return on retirement savings at a cost to Americans of $17 billion a year.

“Middle-class families cannot afford to lose their hard earned savings after a lifetime of work. They deserve to be treated with fairness and respect. And that’s what this rule would do,” Obama said.

The proposal is opposed by many Republicans, financial firms and some of Obama’s fellow Democrats who fear the plan will limit retirement products available to investors and curb brokers’ compensation.

(Ventuno)