Donald Trumps Executive Order Will Let Private Equity Funds Drain Your 401(k)
The Intercept
Donald Trumps February 3 executive order enabling financial advisers to continue ripping off their clients could prove a lifeline for a surprising beneficiary: the private equity industry.
The Department of Labors fiduciary rule would have forced investment advisers in workplace retirement plans like 401(k)s to operate in their clients best interests, rather than recommending high-cost, high-risk products that offer the advisers kickbacks and perks.
The Obama White House estimated in a 2015 report that conflicts of interest cost retirement savers $17 billion annually, though that figure has been challenged.
The fiduciary rule, finalized last year, was to go into effect in April. But the new order directs the Labor Department to review the rule, which is expected to initiate the process of rescinding it.
As Gary Cohn, former Goldman Sachs president and director of the National Economic Council, put it, the fiduciary rule is like putting only healthy food on the menu, because unhealthy food tastes good but you still shouldnt eat it because you might die younger.
Why Trump thinks individual workers must have the freedom to choose poison for their retirement funds is unclear. But one reason could be that his friends in private equity have long sought to add their particular form of junk food to that menu.