What Trump could do to your retirement
Millions of Americans struggling to save for retirement, or trying to live off their investments in old age, are hobbled each year by high fees on products recommended by financial advisers. Now, with Donald Trump's election, a bitterly debated regulation that requires advisers to put their clients' interests first could be derailed.
The Department of Labor ruling, set to take effect in April, was pushed by President Barack Obama and resisted by Wall Street for five years before it was established this spring. Trump hasn't specifically referred to the regulation, known as the fiduciary rule, but unwinding what he argues is regulatory red tape was central to his campaign, and his adviser Anthony Scaramucci, founder of SkyBridge Capital, has argued that the rule should be revoked.
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The rule was the first major overhaul of retirement savings regulations since the 1970s. It was meant to help consumers overwhelmed by a long list of investment choices and perhaps unaware of the profit their broker could make by offering one mutual fund over another. The Obama administration laid out an example of a worker with $100,000 in a 401(k) who rolls her savings into an IRA at age 45. Adjusted for inflation, her investment would grow to an estimated $216,000 by age 65 if it was in low-fee index funds and to just $179,000 if she was steered to high-fee mutual funds.
Supporters of the fiduciary rule point to people changing jobs, or retiring and weighing a rollover from a 401(k) to an IRA, as among the most vulnerable to advisers putting themselves first.
“That’s where the big money is," said Barbara Roper, director of investor protection for the Consumer Federation of America in Washington, D.C. “And right now there’s a lot of incentive to encourage people to roll over even when they’d be better off staying” in a lower-cost 401(k) plan
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