News | 04.16.22
The Fight to Protect Consumers Against Bad Investment Advice is Advancing, but Slowly
The fight to protect consumers from bad investment advice has been a multi-year saga. Many legal experts acknowledge that there has been positive change for consumers, despite the debate over how quickly reforms have happened. Regulators have tried placing less of a burden on consumers to figure out if they can trust financial advice. The Trump-era Department of Labor (DOL) issued a rule in 2020 that reflected a change in attitude around the action of recommending an IRA rollover. Around $534 billion was rolled from workplace plans to IRAs in 2018 — more than seven times the $70 billion of new contributions to IRAs that year, according to data from the Investment Company Institute. For decades, brokers have been able to avoid a “fiduciary” duty relative to those rollover recommendations due to certain workarounds available. DOL's 2020 update means rollover advice is now fiduciary if the broker continues to give “regular” advice to that client afterward.
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