Labor Department issues rule to crack down on bad retirement savings advice

The U.S. Department of Labor issued a final "fiduciary" rule on Tuesday that aims to raise investment-advice standards in retirement accounts.President Obama also tried to crack down on conflicts of interest among brokers, advisors, insurance agents and others who give retirement advice. That rule was killed in court.

Often, advice is tainted by "significant conflicts of interest" and in many circumstances there's "no obligation" to act in retirement customers' best interests, said Lisa Gomez, assistant secretary of the Employee Benefits Security Administration.

Those standards mean financial professionals, when giving personalized investment advice to customers, have an obligation to be prudent, loyal and truthful and charge reasonable fees, for example, Labor officials said.Americans rolled about $779 billion from 401-type plans into IRAs in 2022, according to data cited in a Council of Economic Advisers. Rollovers are common upon retirement, and the annual rollover dollar sum has grown as more baby boomers enter their retirement years.

Meanwhile, industry groups say the regulation isn't necessary and would harm the very retirement savers the Labor Department is trying to protect. Additionally, federal and state rules governed respectively by the Securities and Exchange Commission and National Association of Insurance Commissioners already offer "robust" consumer protections for retirement savers, ACLI said.

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