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. Retirement plan academics like Alicia Munnell (professor at Boston College and Director of its Center for Retirement Research) and Teresa Ghilarducci (labor economist and well-known retirement security expert) repeatedly express concerns about the hidden and unhidden fee practices and amounts of Wall Street and their negative impact on retirement savings accounts.

But it’s not just the new final fiduciary rule that is exposing Wall Streets wolfish appetite for American workers’ savings. Multi-employer health plans are experiencing steep pension benefit losses due to declining membership and contributions, but also bad portfolio allocation decisions by investment advisors. And even little Puerto Rico is not immune from the power and greed of the American financial sector as hedge funds try to force it to reduce pension benefits for retired workers to pay them instead.

Conclusion

There’s no doubt that more Americans are more aware than ever of the large amount of money Wall Street makes off of their retirement savings. And not everyone thinks it’s a good idea for Wall Street to be so intertwined with retirement saving in the first place. The new fiduciary rule is sending a message to Wall Street that what you thought was easy money, is getting less easy. And getting their hands on Social Security, via private accounts, just became that much less likely.

Tags: retirement plan fees, retirement accounts, Fiduciary rule