When you favor public solutions to important, yet costly universal needs, you are immediately labeled a socialist. To avoid this label, you have to ignore the shortcomings and outright failure of the private sector’s handling of important “commodities” like health insurance, health care and retirement savings? Who could say with a straight face that before the Affordable Care Act, health insurance was easy to get for everyone? Or that before the Department of Labor’s fee transparency requirements, the retirement services sector was working hard to make sure plan participants knew they were paying any fees at all?

I get it. We are not a country that likes everyone getting a highly sought after good. Someone has to get it and someone has to not get it so that we know we worked harder or are just better or more deserving than the other person. But when we think like this, we let a small, privileged group of people reap huge rewards they didn’t earn. A group that understands our warped psychology and uses that knowledge to line their pockets...

Of course, the retirement and financial services industries are not the only sectors that take advantage of a status-focused and misinformed public. Nor does everyone in the industry engage in this kind of behavior. But lately I’ve been obsessed with just these guys. I’ve been reading a lot about financial fraud, including insider trading and the CalPERS bribery scandal, and the amount of money some people make cheating the system has led to my of course they are stealing from our retirement savings attitude. By stealing I mean overcharging for the services they provide and making backroom deals for their own benefit. Again, not all of them, but enough that we should rethink our preference for the private sector’s high-costs, high risks retirement savings model. Continue Reading...

Tags: retirement plans, retirement plan fees, Social Security

After much compromise, redrafting, haggling, interference, bullying and support, the Department of Labor issued its final version of the fiduciary rule on April 6, 2016. The fiduciary rule requires retirement plan advisors to put investors interests above their own when it comes to the products they recommend. Advisors will have to disclose, in writing, all fees, compensation and potential conflicts of interest associated with their retirement account recommendations.

Finalizing the fiduciary rule was a long and difficult process for the DOL and it did not get everything it wanted due to the intense opposition of those in the financial industry who saw the rule as a threat to their business practices. These in-the-best-interest-of-the-client opponents articulated their reasons for their opposition, including the costs of updating their computer systems and legal procedures. Basically, they are claiming that the disclosure paperwork they have to hire lawyers to draft, the minor changes they have to make to their computer systems and training their workforce to not take advantage of investors will be costly and burdensome to them.

Yet their lukewarm arguments were good enough to get the support of many members of Congress. Even after Wednesday’s announcement, some in Congress are still trying to stop the final rule from taking effect. But even if Congress succeeds in delaying the final rule (advisors already have two-years to get in full compliance with the final rule), Wall Street has heard the message of the Obama Administration and other retirement plan reform supporters.

You may or may not agree with Senator Elizabeth Warren’s statement that retirement plan service providers and fund managers are “bleeding savers dry,” but Wall Street knows she’s not alone in her opinion. Continue Reading...

Tags: retirement plan fees, retirement accounts, Fiduciary rule

Organized labor deserves a lot of credit for its early efforts at getting health insurance and retirement benefits for workers. But labor also has a history of being slow to adapt to economic, social and political changes that challenge its mission. This has led to a slow erosion of labor union membership in the private sector. It has also resulted in attacks on the health and retirement benefits labor fought so hard for.

I applaud labor's support for the Affordable Care Act (aka Obamacare), and its wider support for universal health care. However, ironically, some of labor's biggest concerns these days involve provisions of Obamacare it sees as unfavorable to its members--the perceived threat to multiemployer health care plans and the "Cadillac tax" (an excise tax on high value health plans). Granted, these provisions are not favorable to unions as they currently operate. But that's the public policy point. Union friendly policy makers are less concerned with the role of unions and more concerned about health and retirement plan access and affordability for everyone. I'm concerned that labor's historical reality of focusing on its narrow interests and its members may cause it to miss out on an opportunity to help achieve the universal health and retirement benefits it claims it wants.

There are several health insurance and retirement plan issues unions can support, and that are growing in economic, social and political importance.

Health care price transparency. Doctors, hospitals and insurance companies have given little substantive attention to the need for providing prices for medical care to consumers. Even as consumers are forced to assume a greater share of the cost of care by way of large deductibles, the medical care establishment consistently pushes back on real price transparency.

• Labor unions should advocate for a change to the Employee Retirement Income Security Act (ERISA) to mandate real medical price transparency by insurers and health care providers. ERISA is a federal law that sets standards for private health and retirement plans. Currently, many insurers provide limited tools that give questionable estimates of cost for some care. Providers offer even less assistance and routinely prescribe care without any consideration of its price and if a cheaper alternative is available.

Tags: obamacare, cadillac tax, price transparency, retirement plan fees