A leaked White House memo supports imposing fiduciary duties on brokers in their dealings with IRA investors, as reported by the New York Times.
Current rules provide a weaker standard for brokers. The memo estimates that the absence of adequate investor safeguards penalizes IRA holders by as much as $17 billion per year. Hopefully, this development indicates that a rule imposing a fiduciary standard will be promulgated by the U.S. Labor Department soon. The securities industry has been vigorously fighting this requirement for years, some threatening to stop offering IRAs that would be subject to the rule. Of primary concern to investors are built in conflicts of interest that brokers often have in recommending IRA investments that may be lucrative to the broker but not right for the investor. The government should err on the side of investor protection in this dispute because the securities industry has the knowledge and resources to protect future retirees, whereas many investors lack the knowledge to protect themselves in the arena of complicated investment products.