WASHINGTON, April 5, 2017 /PRNewswire-USNewswire/ -- A new "Retirement Ripoff Counter" unveiled today at an event headlined by U.S. Senator Elizabeth Warren and AFL-CIO President Richard Trumka, along with Americans for Financial Reform and the Consumer Federation of America, shows in graphic terms how important it is for Americans' retirement security that the fiduciary rule be fully implemented. Every day that conflicted advice continues costs them $46 million a day, $1.9 million per hour, and $532 a second.
Yesterday, the Department of Labor finalized a decision to delay the rule by 60 days, and a review targeting the rule for changes continues.
During today's one-hour news conference, the cost of delaying the rule rose $1.9 million. To underscore the huge toll of conflicted advice, and the need for the rule to be implemented in full and without delay, the Retirement Ripoff Counter will be projected tonight onto the sides of two Washington, D.C. buildings: the Department of Labor and the U.S. Chamber of Commerce (See "Editor's Note" details below.)
Without the fiduciary rule in place, financial professionals can put their interests ahead of their clients when providing retirement investment counseling. That leaves millions of Americans vulnerable to advice that pays lucrative commissions and fees to advisers while exposing savers to excessive costs, poor performance and unnecessary risks.
The White House Council of Economic Advisers has estimated that conflicted advice solely for IRA mutual fund investments and annuities within IRAs costs Americans $17 billion per year. Over 30 years, a retiree who received conflicted advice when rolling over his or her 401(k) to an IRA will run out of savings five years earlier than someone who did not receive conflicted advice.
Experts say even a 60-day delay of the fiduciary rule will cost investors an estimated $3.7 billion over 30 years – too high a price for investors struggling to save for a secure retirement.
"Altogether, families stand to lose nearly $4 billion because of the two-month fiduciary rule delay the Trump Administration just finalized," said U.S. Sen. Elizabeth Warren (D-Massachusetts). "That money matters – it's the difference between retiring with dignity and fighting to stretch every dollar as far as it will go. President Trump and Republicans in Congress may want to make it easier for big banks to cheat their customers, but we're fighting back for a fair marketplace and to protect families' retirement savings."
"When it comes to our hard-earned money — when it comes to saving for retirement — financial advisers have a fiduciary responsibility to provide us with expert advice," said AFL-CIO President Richard Trumka. "This is not too much to ask. We pay them and they should work us. Each day the Trump administration delays implementation, another retirement investor becomes more vulnerable. That is unacceptable."
Stephen Wingate, a retired Vietnam veteran in Sycamore, Illinois, followed the advice of a financial adviser who steered him into high-fee, illiquid investments. Wingate, 69, is trying to recover damages through arbitration, but the adviser is hiding behind the current weak rules. "I didn't realize until after I lost over $140,000 of my retirement nest egg that my adviser wasn't required to act in my best interests," Wingate said. "Had I known my broker was held to the same standard as a car salesman, I wouldn't have trusted him so much."
"The fiduciary rule will help fortify a culture of service to the client in the advice industry," said Kathleen McBride, co-founder of the Committee for a Fiduciary Standard. "Fiduciaries must be competent and act prudently. They must disclose all important facts, and not mislead investors. Fiduciaries avoid conflicts of interest, and when a conflict is unavoidable they disclose the conflict, and manage it in the investor's favor."
"Every American saving for retirement deserves advice that puts their best interests first," said Lisa Donner, executive director of Americans for Financial Reform. "Because even small differences in costs add up over time, you could lose tens or even hundreds of thousands of dollars in retirement income because of conflicted advice. It's not just working people in their prime earning years who are vulnerable. Every day, 10,000 Americans reach the age of 65. And older Americans are especially at risk to lost savings from bad investment advice, because for them it's more and more difficult to make up for those losses."
"The estimate of $17 billion in losses is extremely conservative," said Micah Hauptman, financial services counsel at the Consumer Federation of America. "It didn't include other investments that result in much greater losses to investors. For example, it didn't include fixed indexed annuities and non-traded REITs. Nor did it include an estimate of the harm that befalls retirement savers in the 401(k) space. The fiduciary rule will stem the losses retirement savers are suffering."
"To protect the retirement savings of millions of American workers and retirees, we must continue to defend the fiduciary duty rule tooth and nail on all fronts," Stephen W. Hall legal director and securities specialist. "The courts will continue to be a critical battleground in this fight."
The fiduciary rule is good not only for investors but also for confidence in financial institutions. As the respected John C. Bogle, founder and former chief executive of Vanguard Group, has explained: "It simply doesn't seem like a good business practice for Wall Street to tell its client-investors, 'We put your interests second, after our firm's, but it's close.'"
The fight to save the fiduciary rule is far from over. The more people hear about it, the more strongly they feel it needs to be in place; industry has already challenged the rule in court three times, and three times been unsuccessful, with judges finding that the Department of Labor acted reasonably, and with serious consideration of the costs and benefits of the rule. The law does not permit the new Administration to ignore the evidence and the record, and undermine the rule just because Wall Street doesn't like it.
To learn more about the benefits of preserving the fiduciary rule, go to www.saveourretirement.org.
For Senator Warren: Lacey Rose, firstname.lastname@example.org or (202) 224-2292
For news event: Pat Mitchell, (703) 276-3266 or email@example.com; and Max Karlin, (703) 276-3255 or firstname.lastname@example.org
For Americans for Financial Reform: Carter Dougherty, email@example.com or (202) 251-6700
EDITOR'S NOTES: The April 5 evening projection of the Retirement Ripoff Counter will commence at 8 p.m. at the US Dept of Labor, 3rd St. and Constitution, and proceed to US Chamber headquarters at 9:15 p.m. Projection will proceed rain or shine. For more information, contact Patrick Mitchell, (703) 276-3266 or firstname.lastname@example.org.
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/532-a-second-trump-administration-delay-of-fiduciary-rule-protecting-retirement-savers-will-scramble-nest-eggs-of-tens-of-thousands-of-americans-300435331.html
SOURCE AFL-CIO; Consumer Federation of America; Americans for Financial Reform