Allison MacKenzie Attorney, Jordan Walsh, Explains the Department of Labor’s Final Rule
The way we plan for retirement in the United States has changed drastically in recent years. In the past, employees could rely on their pension, which was typically managed by a financial expert, to support them through retirement. Today, for most of us, pensions are things of the past, and we, as individuals, are responsible for making the financial choices that will shape when and how we may retire.
While this system provides retirement savers with the flexibility to make financial choices that are uniquely tailored for their situations, this method of saving is fraught with pitfalls for retirement savers because most of us lack the expertise, time, and confidence, to invest our savings in a manner that will allow us to efficiently meet our retirement goals. Accordingly, we look to financial advisors to assist us in making smart financial decisions that will allow us to reach our retirement saving goals.
While most of us have good relationships with our financial advisors, statistics suggest there’s a segment of financial advisors who abuse the trust of their clients by putting their own financial gain above that of their clients. The Department of Labor (DOL) and the White House Council of Economic Advisors (CEA) estimate on average conflicts of interest between unscrupulous financial advisors and their clients cause retirement savers to earn one full percentage point less annually than would be expected based on the status of the economy on their returns.
Furthermore, the DOL estimates such advisors cause their clients to waste upwards of $17 billion of retirement savings every year on exorbitant fees and lost revenue associated with the purchase of ill-advised financial products resulting from a conflict of interest. These conflicts of interest can occur because financial advisors aren’t currently held to a fiduciary standard under the law, and for this reason, they owe their clients no duty to provide advice that aligns with the client’s financial goals. In fact, it’s common for firms and purveyors of financial products to provide financial incentives to advisors whose clients invest in certain financial products.
For the complete article, visit: Nevada Appeal.
Jordan Walsh is an associate with Allison MacKenzie Law Firm with primary practice in the areas of Labor and Employment Law and Civil Litigation. Jordan was admitted to practice in Nevada and California in 2014.