This is Harold Pollack. Thanks for watching our video.
What you just watched is a bit tongue-in-cheek. But it describes an entirely serious personal and policy issue: Self-interested advice from financial professionals regarding your retirement and other investments. Read here for more information about this video.
The very anxieties and consumer ignorance that lead us to seek financial advice make us vulnerable when advisors face financial incentives to steer us towards overpriced or unwise investment products. Such behavior is quite common within the industry. This behavior is also quite costly.
There’s another challenge, too. These issues are complicated and boring. So only two groups are paying close attention. A small group of consumer advocates and economists who have pushed for stringent Department of Labor regulations governing professionals’ advice regarding retirement savings. The other watchful constituency is the financial industry itself, particularly the small and large firms that have the most to lose from more stringent consumer regulations.
What you can do
We are hoping that you will do two things. The first will help yourself. The second will help everyone else.
- Demand financial professionals commit to a fiduciary standard in all of their dealings with you.
In managing your retirement savings and your other investments, have a cordial but direct exchange with your financial professional requiring that she commit in writing to a fiduciary standard in all of her dealings with you. The fiduciary pledge, available here, is a reasonable way to do this. Sure, it’s an awkward conversation. But it’s your money. To get a sense of its importance, check out the fine-print word salad from Fidelity Investments here…
- Contact your representative and let them know that you support the Department of Labor’s strong fiduciary standard rule
The financial industry has been intensely lobbying to weaken or overturn the new rule. Many Senators and Representatives suspect that no one else particularly knows or cares about this issue. This is not a partisan or ideological issue. It is rather an issue of special interests trying to block the correction of obvious market failures.
There’s only one way to dispel that suspicion: Contact your Senator or Representative. Just give them a simple message: You demand the consumer protections of a fiduciary rule.