(Freedom.news) Don’t look now, but the federal government is proposing new regulations that are going to cost you more money and, perhaps, a viable retirement.
As reported by the Washington Free Beacon, the Labor Dept. wants to micromanage the advice your financial advisor can give you – a requirement that could cost savers as much as $80 billion a year, according to an analysis [PDF] by the Competitive Enterprise Institute.
The rule, which was proposed in April 2015, would restrict the advice that financial experts could provide clients. If enacted the rule would give the federal government, via the Department of Labor, regulatory authority over financial advice concerning Individual Retirement Accounts, or IRAs. It would require financial advisors to only act in the “best interest” of savers – as if that’s not what they already do, considering they make commissions on monies invested with and by them on behalf of clients.
The CEI report said that the department claims the rule is needed because individuals were incapable of “prudently” managing “retirement assets on their own.” Further, the department says that clients “generally cannot distinguish good advice, or even good investment results, from bad.”
“Given the language in the rule, [the agency] may well believe it was drafting a ‘fiduciary rule for dummies,’ because it expresses doubt that savers can make wise investment choices in their 401(k)s and individual retirement accounts,” the report states.
The rule puts government bureaucrats who, no doubt, would not be financial advisors themselves, in control of what real financial advisors can say to advise savers. CEI says that will crimp choices for consumers and likely cost them big money on returns.
“It will be almost inevitable that financial service providers will restrict choices of investment vehicles and strategies and look for a ‘safe harbor’ of particular investments the government would bless,” the report says. The report argues that even center-left economists have said that the fiduciary requirement is a “vague open-ended obligation with seemingly no bounds.”
Which is typical for a government bureaucracy – open-ended, broad, vague requirements that only it can interpret or define, and then based purely on circumstances and context of its own choosing.
The WFB reports further:
The report asserts that the rule would cost middle-class savers $80 billion over 10 years in lost savings. It would prevent brokers from taking third-party commissions, so they would likely have to charge investors more to make up for the loss. Brokers may even stop servicing some portfolios because they are too small to justify the cost of a management fee.
“The pending Obama administration regulations could cost middle class savers $80 billion in lost savings, imposing big regulatory barriers for small investment portfolios,” said John Berlau, author of the report and a senior fellow at CEI. “Congress should act now to block implementation of the Department of Labor’s harmful fiduciary rule, which has been dubbed ‘Obamacare for Your IRA.’”
Our government – keeping us regulated, bottlenecked, and poor in every imaginable way.
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