Historic New DOL Disclosure Regulations Still Face Long Battle for Full Implementation

West Palm Beach, FL, April 7, 2016 (Newswire.com) - Today’s historic announcement that millions of investors will finally be able to receive objective, unbiased information about their investment choices is a major step forward, but it still faces an uphill battle from one of the most powerful, reactionary lobbying forces in Washington, according to financial commentator Chuck Epstein. 

“The new U.S. Department of Labor regulations mandating fee disclosures for 401(k)s and mutual fund shareholders marks the first time millions of investors will be able to see the actual costs of their 401(k) plans.  But, for many investors, this new information will be shocking,” Epstein said.

"This is why the financial industry has spent millions on lobbying against the Depart of Labor's fiduciary rule for so many years. And even though the regulations will take effect in stages beginning in April 2017, the financial services industry will continue to work day and night against the DOL regulation. Based on their lobbying efforts that have focused on the fiduciary standard over the past decade, I doubt if there is any industry in the U.S. which has such distain for its own customers as the financial services industry," Epstein said.

Chuck Epstein , Editor, Mutualfundreform.com

The new regulations will also change the way financial advisors work with their clients and could mean a whole new business model for the investment industry, which is a major reason why the financial services industry has spent millions of dollars lobbying against the fiduciary standard for almost a decade, he added.

While the Council of Economic Advisers calculated that a worker who rolls over 401(k) savings to an IRA at age 45 and received inaccurate advice from an advisor could have 17% less savings by the time they reach age 65, there are 17 other separate fees that can be charged to unsuspecting investors.  The Council estimated that investment advice tainted by conflicts-of-interest costs investors about $17 billion a year.

“These are huge numbers,” Epstein said, “but they don’t include the $9.5 billion in revenue sharing and 12b-1 fees that are paid annually to financial firms and representatives. The DOL’s new fiduciary regulations are intended to force disclosure of all these revenue streams and that is why they have the potential to overturn the industry’s very profitable business model that’s based on conflicts-of-interest between investors and investment professionals.

“This is why the financial industry has spent millions on lobbying against the rule for so many years.  And even though the regulations will take effect in stages beginning in April 2017, the industry will continue to work day and night against the DOL regulation. Based on their lobbying efforts that have focused on the fiduciary standard over the past decade, I doubt if there is any industry in the U.S. which has such distain for its own customers as the financial services industry,” he said.

As presented in Epstein’s book, How 401(k) Fees Destroy Wealth and What Investors Can do To Protect Themselves, 401(k) participants pay about $164 million in fees daily to the financial services industry. Even worse, most participants do not even know what services they are paying for or the conflicts-of-interest taint many 401(k) plans.

Until the new regulations are formally implemented, Epstein recommended that investors do the following to protect their portfolios:  

·         Learn to identify conflicts-of-interest in financial relationships, including those affecting your 401(k) at work ;

·         Remember that managing fees and expenses is the most important factor under an investor’s direct control. They must be managed for long-term financial success;

·         Follow the “one-strike and you’re out rule” when it comes to dealing with your financial advisor. “Financial mistakes are too expensive for all investors and for retirees they represent money that can never be recovered,” he said.

·         Ask your financial advisor if they adhere to the fiduciary standard, then ask them what it means to them, and finally, have them put that claim in writing.

·         Get politically active and ask your elected representatives in Congress to continue to advance the DOL’s fiduciary standard regulation.

The book, How 401(k) Fees Destroy Wealth and What Investors Can do To Protect Themselves, is based on the first-hand experiences of Palm Beach Gardens, Florida-based author and financial professional Chuck Epstein, who spent over 25 years in the financial services industry and has held senior-level positions at major investment firms. He blogs about financial industry developments at his site, www.mutualfundreform.com.

The book is available on Amazon for $15.95 and Kindle for $9.95.  It is 259 pages, with six charts, a glossary and over 250 footnotes.  ISBN 978-1477657997

 

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