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.
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
-
7 drinks for every winter need possibleThe Week Recommends Including a variety of base spirits and a range of temperatures
-
'We have made it a crime for most refugees to want the American dream'Instant Opinion Opinion, comment and editorials of the day
-
Was the Azerbaijan Airlines plane shot down?Today's Big Question Multiple sources claim Russian anti-aircraft missile damaged passenger jet, leading to Christmas Day crash that killed at least 38
-
Judges block $25B Kroger-Albertsons mergerSpeed Read The proposed merger between the supermarket giants was stalled when judges overseeing two separate cases blocked the deal
-
Rupert Murdoch loses 'Succession' court battleSpeed Read Murdoch wanted to give full control of his empire to son Lachlan, ensuring Fox News' right-wing editorial slant
-
Bitcoin surges above $100k in post-election rallySpeed Read Investors are betting that the incoming Trump administration will embrace crypto
-
Enron mystery: 'sick joke' or serious revival?Speed Read 23 years after its bankruptcy filing, the Texas energy firm has announced its resurrection
-
US charges Indian tycoon with bribery, fraudSpeed Read Indian billionaire Gautam Adani has been indicted by US prosecutors for his role in a $265 million scheme to secure solar energy deals
-
Boeing machinists approve contract, end strikeSpeed Read The company's largest union approved the new contract offer, ending a seven-week strike
-
US economy still strong in final preelection reportSpeed Read It grew at a solid 2.8% annual rate from July through September
-
Boeing machinists reject deal, continue strikeSpeed Read The rejection came the same day Boeing reported a $6.2 billion quarterly loss
