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Protecting Your Retirement: Push to Close Investment Loophole

Could bad advice ruin your retirement? Advocates want to close a loophole they say is putting too many Missourians at risk. Credit: www.401kcalculator.org via flickr
Could bad advice ruin your retirement? Advocates want to close a loophole they say is putting too many Missourians at risk. Credit: www.401kcalculator.org via flickr
September 15, 2015

KANSAS CITY, Mo. - Today more people than ever invest for their retirement with 401-K or IRA plans, as opposed to traditional pensions, which is why financial experts want to make sure the law requires financial advisers are on your side.

Jay Hardenbrook, associate state director for advocacy with AARP Missouri, says right now there's no fiduciary responsibility for those investment advisers, meaning instead of giving you the best advice, they could be lining their own pocketbooks with bigger fees.

He says there are a few bad apples in every industry, and the effects can be devastating.

"If you've been putting aside your hard-earned income for your entire life so you can retire, you shouldn't have, in our research, up to 25 percent of it taken, through basically looking out for their best interest instead of yours," says Hardenbrook.

The U.S. Department of Labor has proposed a new rule which would revise the standards for investment advisers 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, Hardenbrook believes it would simply ensure 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.

"You're depriving them of what could be a very large chunk of their retirement account," he says. "Their income, really, moving through the end of their lives."

Americans lose an estimated $17 billion worth of retirement savings per year due to poor investment advice, according to AARP. The public can comment on the proposed change for the next month, online.

Mona Shand, Public News Service - MO