White House Memo Makes Case for Fiduciary Standards for Brokers Advising 401(k) Plans
If a White House memo from Jason Furman, Chairman of President Obama’s Council of Economic Advisors is any indication, brokers advising 401(k) plans will soon be under a fiduciary standard, which would require them to act in the Plan’s best interest, and not a “suitability” standard, which currently exists. If such a plan were implemented, then revenue sharing or payments received for selling certain funds will no longer be permissible. According to the memo, abusive trading practices are costing workers as much as $17 billion in savings annually, which is one of the main reasons behind supporting the fiduciary standard.
Wall Street firm’s are opposed to the practice, and The Securities Industry and Financial Markets Associate, Wall Street’s largest trade group has previously said that opposing the Labor Department’s plan to require a fiduciary standard for all advisers to 401(k) plan’s is a top priority. The Labor Department has been evaluating implementing a universal fiduciary standard and the advisory community has been expecting the Labor Department to issue a proposal.
Source: Bloomberg News.
