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Could Bad Investment Advice Ruin Your Retirement?

PHOTO: Bad investment advice can break the bank for Michiganders saving for retirement, which is why some consumer groups want to close a loophole in the regulations for investment advisers. Photo credit: MConnors/Morguefile.
PHOTO: Bad investment advice can break the bank for Michiganders saving for retirement, which is why some consumer groups want to close a loophole in the regulations for investment advisers. Photo credit: MConnors/Morguefile.
May 14, 2015

LANSING, Mich. - Saving money for retirement is difficult, which is why consumer advocates want to make sure Michiganders don't lose any of their hard-earned savings due to bad advice.

Today, more workers invest in 401K plans and IRAs, as opposed to traditional pension plans for retirement savings. Lisa Dedden Cooper, manager of advocacy with AARP Michigan, says problems can arise because some of the investment advisers which investors may rely on aren't required to act in the best interest of their client.

"In other words, a particular investment might not be the best fit for you, but perhaps it generates higher fees or a commission for the advisor," says Dedden Cooper.

Americans lose an estimated $17 billion of retirement savings per year due to poor investment advice, according to AARP.

The U.S. Department of Labor has proposed a new rule which would revise the standards for investment advisors for the first time in more than 40 years, and close what has been called the "conflict of interest" loophole.

While some within the investment industry have criticized the proposal saying it could limit investor choices, Dedden Cooper believes it would simply ensure that everyone in the business of selling retirement account advice would be held to the same high standard, and protect workers and their families from being taken for a ride.

"Essentially, bad advice could cost as much as 25 percent of their retirement income," she says. "People work hard to save, it's not easy. So you want peace of mind that the advice that you're getting is in your best interest."

Public comment on the proposed rule will be accepted through July 6.

More information is available at the AARP Michigan website at www.aarp.org/mi.

Mona Shand, Public News Service - MI