Brokers No Longer Allowed to Scam You on Your IRA Investments

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After six years, a new rule requiring brokers to act in their clients’ best interests has finally gone into effect:

The fiduciary rule is aimed at curbing billions of dollars in fees paid annually by small savers who transfer money out of 401(k)s, which are required to operate in their best interests—and into individual retirement accounts, which aren’t currently bound by such protections. There, savers may be working with financial-product salespeople who earn more selling certain products and don’t have to put their clients’ interests before their own.

Administration officials intend it as a direct attack on what they consider “a business model [that] rests on bilking hard-working Americans out of their retirement money,” Jeff Zients, director of the White House National Economic Council, told reporters Tuesday.

….“Unless we see fundamental changes, this rule will remain unworkable, and we will consider every approach to address our concerns,” David Hirschmann, head of the U.S. Chamber of Commerce’s capital-markets division, said in a statement Tuesday. The chamber has said it was considering a lawsuit to block the regulation.

Unworkable! Sure, brokers have been following this rule for years with 401(k) plans, but extending that to IRAs will bring Wall Street to its knees. That’s despite a wide range of concessions from the administration after it received comments on the proposed rule:

Mr. Perez said, for example, that an employee of MetLife Inc. wouldn’t be obligated to advise clients about offerings from a competitor, like New York Life….To cut down on paperwork that industry officials said would be too burdensome, the new version of the rule only requires that firms sign one “best interest contract” with clients when they open an account.

….The latest rule also clarifies that brokers and others can continue offering a wide range of guidance without having to clear the “fiduciary” bar for “advice.” It specifies that investor education isn’t considered advice, allowing companies to continue providing general education on retirement savings. Also excluded from the advice category are general circulation newsletters, media talk shows and commentaries as well as general marketing materials.

Hmmm. “General education.” I have a feeling these are going to be boom times for general education. Stay tuned.

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THE TRUTH IS...

what drives Mother Jones' team of 50-plus journalists. The truth is powerful, as evidenced by how hard those with something to hide, or profit to gain, seek to discredit it. The truth, stated boldly and reported meticulously, is what draws so many readers to Mother Jones.

And the truth is, going into the final 4 days of the year we still needed to raise $TK to hit our $350,000 goal and start 2021 on track. It's nerve-wracking, wondering if the big spike we normally see at the end of December is going to be another thing that doesn't go as planned in 2020, or worse, if, now that Donald Trump is set to leave the White House (for longer than a taxpayer-funded golf trip to a property he owns), folks might be pulling back from fighting for the truth and a democracy and think the hard work is done.

It's not, and if you can right now, please consider a year-end donation to support our team's fearless nonprofit journalism so we can close that big fundraising gap and finish the year strong, ready for all that's ahead in 2021. Whether you can give $5 or $500, it all matters in keeping us charging hard, and we'd be grateful.

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