Brokers No Longer Allowed to Scam You on Your IRA Investments

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After six years, a new rule requiring brokers to act in their clients’ best interests has finally gone into effect:

The fiduciary rule is aimed at curbing billions of dollars in fees paid annually by small savers who transfer money out of 401(k)s, which are required to operate in their best interests—and into individual retirement accounts, which aren’t currently bound by such protections. There, savers may be working with financial-product salespeople who earn more selling certain products and don’t have to put their clients’ interests before their own.

Administration officials intend it as a direct attack on what they consider “a business model [that] rests on bilking hard-working Americans out of their retirement money,” Jeff Zients, director of the White House National Economic Council, told reporters Tuesday.

….“Unless we see fundamental changes, this rule will remain unworkable, and we will consider every approach to address our concerns,” David Hirschmann, head of the U.S. Chamber of Commerce’s capital-markets division, said in a statement Tuesday. The chamber has said it was considering a lawsuit to block the regulation.

Unworkable! Sure, brokers have been following this rule for years with 401(k) plans, but extending that to IRAs will bring Wall Street to its knees. That’s despite a wide range of concessions from the administration after it received comments on the proposed rule:

Mr. Perez said, for example, that an employee of MetLife Inc. wouldn’t be obligated to advise clients about offerings from a competitor, like New York Life….To cut down on paperwork that industry officials said would be too burdensome, the new version of the rule only requires that firms sign one “best interest contract” with clients when they open an account.

….The latest rule also clarifies that brokers and others can continue offering a wide range of guidance without having to clear the “fiduciary” bar for “advice.” It specifies that investor education isn’t considered advice, allowing companies to continue providing general education on retirement savings. Also excluded from the advice category are general circulation newsletters, media talk shows and commentaries as well as general marketing materials.

Hmmm. “General education.” I have a feeling these are going to be boom times for general education. Stay tuned.

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SIX TRUTHS

Reclaiming power from those who abuse it often starts with telling the truth. And in "This Is How Authoritarians Get Defeated," MoJo's Monika Bauerlein unpacks six truths to remember during the homestretch of an election where democracy, truth, and decency are on the line.

Truth #1: The chaos is the point.

Truth #2: Team Reality is bigger than it seems.

Truth #3: Facebook owns this.

Truth #4: When we go to work, we're in the fight.

Truth #5: It's about minority rule.

Truth #6: The only thing that can save us is…us.

Please take a moment to see how all these truths add up, because what happens in the weeks and months ahead will reverberate for at least a generation and we better be prepared.

And if you think journalism like Mother Jones'—that calls it like it is, that will never acquiesce to power, that looks where others don't—can help guide us through this historic, high-stakes moment, and you're able to right now, please help us reach our $350,000 goal by October 31 with a donation today. It's all hands on deck for democracy.

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