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  3. The way Americans plan for retirement is about to change—again. At the urging

The way Americans plan for retirement is about to change—again. At the urging

游客2025-01-11  2
问题    The way Americans plan for retirement is about to change—again. At the urging of President Obama, the Department of Labor is backing a rule that would alter who can offer financial advice on retirement funds. On its face, the idea seems superfluous: the rule, which would go into effect next year, requires that individuals providing advice on retirement savings put their clients’ interests ahead of their own.
   Isn’t that what people hire advisers to do in the first place? "Anyone can call themselves a financial adviser," says David Certner, legislative policy director at AARP, the lobbying organization for seniors. Many consumers believe all financial advisers operate under uniform codes like doctors or lawyers. "But people don’t understand that there are different types, and they can act against your interest and in their own," says Certner.
   There are two standards brokers have to adhere to. There’s the fiduciary standard, which requires financial advisers—registered investment advisers and those appointed under existing law— to offer financial advice that takes their clients’ best interests into consideration. But there’s also a less stringent "suitability" standard, which gives advisers leeway to offer advice that works for their client but can also help them earn a higher commission or some other financial incentive. According to the Department of Labor, that loophole causes Americans to lose out on making an additional $ 17 billion on their investments every year.
   They stakes have grown as the nature of retirement has shifted. Over the past four decades, for example, there has been a sharp decrease in the number of employer- provided retirement-benefit plans, or pensions, and a steep rise in the number of employees setting aside their own funds in 401(k)and 403(b)plans and individual retirement accounts, or IRAs.
   As a consequence, Americans have grown to rely more heavily on financial advisers and planners who can help them navigate the confusing or stress-inducing process of saving for retirement. According to a survey conducted by the Certified Financial Planners Board, which licenses fiduciary financial planners in the U. S. , 40% of Americans now work with a financial adviser to secure their retirement, up from 28% in 2010.
   At the Garrett planning network, a national financial-planning firm, advisers often share stories from clients who found themselves on the receiving end of bad retirement advice. During an exchange last spring, one adviser recalled encountering a woman who was about to retire and had asked a nonfiduciary adviser for advice about her $ 1 million 401(k)rollover. She was advised to invest in an annuity and a trust, a move that earned her adviser a tidy 7 % sales commission. Sheryl Garrett, founder of the Garrett Planning Network, claims her advisers see that kind of behavior all the time.
   Under the Department of Labor rule, which is expected to be finalized in early 2016, the standard will shift toward the consumer. Anyone offering financial advice on retirement accounts would be required to adhere to the fiduciary standard. The rule marks the biggest change to the Employee Retirement Income Security Act, which established minimum standards for pension plans, in 40 years.
   But many, including Republicans in Congress, argue that the Department of Labor’s rule is unworkable and will put unnecessary burdens on small-business owners. Because of how it governs IRAs and employer-provided plans, they argue, the rule would make it hard for small-business owners to help their employees get financial advice. They also say the change will adversely impact lower- and middle-income Americans, the same investors who are the most at risk.
   "All sides in this debate agree that advisers should work in their clients’ best interests. But Americans’ best interest will not be served by a regulatory scheme that directs small businesses and people to advisers too costly for Main Street America," Dirk Kempthorne, president and chief executive of the American Council of Life Insurers, wrote to the Washington Post. The Department of Labor found that insufficient or nonexistent investment advice led owners of IRAs and other retirement accounts to lose out on $ 114 billion in 2010.
   The split over the rule has fallen along party lines. Perhaps not surprisingly, harsh rhetoric on both sides has followed. The Republican-led Congress has drafted a bill that would block the Department of Labor from implementing the new rule. Obama has issued a veto threat. Either way, a great deal is at stake. Says Garrett: "When people have more faith and trust in our industry, they’ 11 start investing more. " [br] What is the major difference between the fiduciary standard and the "suitability" standard for brokers?
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答案 the fiduciary standard: financial advisers should put the interests of clients in the first place / "takes their clients’ best interests into consideration" / "suitability" standard: a less stringent one / while offering clients with financial advice / they can also try to get some financial interests for themselves("help them earn a higher commission or some other financial incentive")/ give them some chance("leeway")to act freely for their own interests
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