Support for New Conflict of Interest Rule Grows as Washington Pushes to Re-define Fiduciary Regulation

Johnston, IA – April 15, 2015 /MM-LC/ —

As Washington pushes forward with a new proposal to raise professional standards for brokers who advise retirees, a majority of baby boomers remain unaware of the fact that not all financial advisers abide by the same fiduciary rules. As the largest generation of pre-retirees and retirees in American history to seek the guidance of investment advisers in planning their nest eggs, the pressure is on to educate consumers about ways to avoid conflicted investment advice by choosing the right advisor.

A report released in Feb. 2015 by the White House Council of Economic Advisers (CEA) states that conflicted advice can result in economically detrimental costs to the retirement savings of any unsuspecting retiree. Unregulated advisors have no restrictions to keep them from selling bad investment products, effectively lining their own pockets at the expense of their unwitting clients.

The report addresses scenarios in which Wall Street brokerage firms benefit from backdoor payments and hidden fees by selling bad retirement investment products to unwitting clients. These products often translate to high costs and low returns for investors, and end up costing middle-class retirees billions of dollars annually. According to the CEA report, annual losses of 1 percentage point for affected investors, brought about by ill-advised investment products could reduce a person’s retirement savings by more than a quarter over 35 years.

As it stands, the retail brokerage system packages and sells investment products and services to the general public, then distributes its products and advice through a broker. The broker’s job is to close the transaction between the client and the market, for which the broker receives a commission based on how much product they move in the transaction, irrespective of whether or not the client benefits.

Retail products like mutual funds, are designed to give the general public easy access to financial markets. Distribution and marketing costs, together with internal trading commissions, are built into these retail products, making them that much more profitable for the large retail brokerage firms to create, operate and distribute.

While some retirement savings plans are entitled to protection under the law, not all savings plans are safe. When it comes to 401(k)s and IRAs, individual investors bear more responsibility than ever for making investment decisions, but most don’t have the experience or expertise to make those determinations themselves. These are the investors who, in recent years, have grown increasingly reliant on the professionals to whom they turn for advice.

Unless he or she is a fiduciary, the broker has no responsibility to provide “best advice” to either buyer or seller.

Retirement expert James Weiss ChFC^? whose firm Weiss Merkle Financial, LLC operates under the fiduciary standard, tries to help educate the community on the differences between fiduciary advisers and non-fiduciary broker-dealers. The Johnston, Iowa financial specialist says that while 90 percent of the industry is focused on selling investment products, firms like his focus on developing comprehensive retirement plans designed to help each retiree remain financially solvent for the rest of their life. He suggests screening potential advisors by knowing what questions to ask, what disclaimers to look for and what results to target.

“The term “broker-dealer” is a red flag for conflict,” he says. “We encourage individuals to look for a fiduciary who has the retiree’s best interests at heart and can provide a customized comprehensive plan for their retirement.”

A comprehensive retirement plan is one that includes a written document that shows how risks have been factored and determines how much income will be available throughout their retirement.”

The world of investment advice is plagued with conflicts of interest, vague disclosure rules and a general lack of transparency. Finding an investment adviser who will act as a fiduciary on the client’s behalf can help protect retirees from many of the problems associated with commission-oriented, product focused brokers. Since a fiduciary is required by law to provide full disclosure of how they are paid and any conflicts of interest that may exist, consumers who select a fiduciary for financial advice and planning services are in the best position to maximize their retirement income potential.

For more information about us, please visit http://www.WeissMerkleFinancial.com

Contact Info:
Name: James Weiss
Email: James@weissmerklefinancial.com
Organization: Weiss Merkle Financial, LLC
Phone: (515) 278-4110

Video URL: https://www.youtube.com/results?search_query=weiss+merkle+financial&spfreload=1

Source: http://councilofeliteadvisors.com/liftmedia

Release ID: 79594

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