(HorizonPost.com) -The Biden administration on Tuesday unveiled a new rule designed to close loopholes that allow added costs to consumers seeking retirement investment advice, The Hill reported.
The latest rule, which is part of the administration’s broader effort to tackle so-called “junk fees,” addresses potential conflicts of interests of financial advisors who provide guidance on retirement plans.
The proposal from the Department of Labor requires financial advisors to offer retirement advance that is in the best interests of retirement planners rather than in the interests of the firm pushing specific product investments, which, according to the White House can collectively cost retirees billions every year.
According to a blog post published by the White House Council of Economic Advisors, financial advisors must abide by a “fiduciary standard” to place their client’s interests ahead of their own commissions when giving investment advice. However, there are “blind spots in the current rules” that can increase the costs and fees to consumers that impact their retirement savings, the blog post said.
According to the White House, the proposal ensures that advisors provide advice that is in the saver’s best interest regardless of whether they are recommending an insurance or security product or where their advice is given.
The new rule also seeks to address a loophole involving advice given on rolling assets over from a 401(k) into an Individual Retirement Plan.
The new proposal is the latest in the president’s efforts to address junk fees, the fees that often create unseen additional costs for consumers. Previously, the White House announced actions to address hidden fees in banking, cable bills, hotel bookings, and airline tickets.
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