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Labor Dept. Tackles Investment Fees, Conflicts of Interest

How do you know if you're getting reliable investment advice and paying the least possible amount of fees and commissions? Too often, you don't, says the U.S. Labor Department. Credit: Lisa Solonynko/morguefile.com.
How do you know if you're getting reliable investment advice and paying the least possible amount of fees and commissions? Too often, you don't, says the U.S. Labor Department. Credit: Lisa Solonynko/morguefile.com.
August 10, 2015

PORTLAND, Ore. – A final hearing is being held this week in the nation's capital on the U.S. Labor Department's new Conflicts of Interest Rule, with stricter guidelines for financial advisers and insurance agents about acting in their clients' best interest.

In Oregon, some of the same ethics precautions are spelled out as part of the licensing requirements for investment advisers. And yet, the state still gets complaints every month about people giving bad – or self-serving – financial advice, says Jake Sunderland, public information officer with the Oregon Department of Consumer and Business Services (DCBS).

"Most complaints end up being what we would consider material omissions or misrepresentation, and that's considered fraud – misrepresenting your investment or admitting that they have a financial interest in the investment that they're advising to you," he explains.

Sunderland encourages anyone with concerns about an investment adviser to contact DCBS, as complaints can reveal patterns of misconduct.

The biggest Oregon investment fraud case in history is set to wrap up in November, when former Sunwest Management CEO Jon Michael Harder is sentenced for bilking more than 1,000 investors out of $130 million.

AARP is supporting the tougher federal Conflicts of Interest Rule, says Elaine Ryan, a national vice-president for the group.

Of major concern, according to Ryan, are the fees and commissions on retirement accounts – they're not illegal, but raising eyebrows with estimates that people are being steered into investments that put between $8 billion and $17 billion a year into the advisers' pockets.

"We know those hidden fees erode people's lifetime retirement savings – as much as 25 percent could be lost in your lifetime of savings, to those types of fees," she says.

The Labor Department says the current guidelines for retirement investment advice were passed in the 1970s, before IRAs or 401-K plans had been created.

AARP is circulating an online petition urging greater protection of retirement savings at aarp.org/loophole.

Chris Thomas, Public News Service - OR