US President Barack Obama will be giving direction to the Department of Labor on Monday for proceeding with the new rules that would restraint in conflicts of interests among the brokers in the Wall Street who deal with advising their clients on retirement investments, according to a top economic adviser in the Obama administration.
“The President will call on the Department of Labor to establish updated rules of the road to make sure that responsible Americans who are saving for retirement are getting a fair share of returns on their savings,” Obama’s senior economic adviser Jeff Zients said during a conference call with the mediapersons on Sunday.
With the newly proposed changes, the brokers would be mandatorily asked to follow a stringent “fiduciary standard” to prioritize the interests of clients over that of brokers.
Obama administration’s proposal is being opposed by several Republican leaders as well as the financial companies, who say the plan is fearful and can limit broker compensation.
The officials said that the proposed measures would keep a check on the “hidden fees” that the financial advisers and firms pocket while steering their clients into more expensive products that are likely not the best selection for the investor. According to the White House, such practices claim working and middle-class families whopping USD 17 billion per year in costs.
Tom Perez, US Secretary of Labor, said that the government would make the proposal public in the coming months and would finalize it after receiving feedback from different quarters during the comment period.
Citing few differences with the prior proposal, Perez said, “We expect that the proposed rule will not ban commissions or any common compensation practices, and it will allow financial advisers to continue providing general education on retirement savings.”
The US government’s push for tighter and stringent rules go very well with Obama’s mission of championing the middle class, a theme which is expected to dominate the 2016 presidential election and the campaigning.
Obama will be revealing his proposal during remarks hosted by the Association of American Retired Persons (AARP) which has also lobbied for the change in rule for broker advice on retirement investments along with consumer and labor advocacy groups.