U.S. rolls out new consumer-oriented rules for retirement brokers

U.S. Labor Secretary Thomas Perez rolls out new retirement savings rules
(Image credit: Brendan Smialowski/AFP/Getty Images)

On Wednesday, the Labor Department unveiled long-awaited rules aimed at reducing conflicts of interest from financial brokers, especially those advising and purchasing stocks, bonds, and other investments for smaller savers. The new rules, which could affect $14 trillion in retirement investments, require brokers acting as retirement advisers to act as "fiduciaries," or trustees legally bound to represent their clients' "best interests." 401(k) accounts are already covered by the "best interests" requirements, but IRA and other retirement brokers currently only have to offer "suitable" investment recommendations. The White House estimates that brokers' conflicts of interest cost U.S. families $17 billion a year.

"This is a huge win for the middle class," Labor Secretary Thomas Perez told reporters on Tuesday. "We are putting in place a fundamental principle of consumer protection." Critics of the current rules say they allow brokers to charge onerous fees or recommend products that give them undisclosed commissions. The Obama administration first proposed the new rules six years ago, and Perez said his department made several changes to accommodate industry concerns, including pushing the compliance date back to April 2017, during the next administration.

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Peter Weber, The Week US

Peter has worked as a news and culture writer and editor at The Week since the site's launch in 2008. He covers politics, world affairs, religion and cultural currents. His journalism career began as a copy editor at a financial newswire and has included editorial positions at The New York Times Magazine, Facts on File, and Oregon State University.