A memo drafted by Jason Furman, one of President Obama’s top economic advisors, entitled “Draft Conflict of Interest Rule for Retirement Savings” was reportedly obtained by Bloomberg News.
The memo cites research that says investors may lose between $8 billion and $17 billion per year as a result of stockbroker/financial advisor practices, such as excessive trading commissions. That number, while astonishing, may even be an underestimate according to some people.
As a result, some on Capitol Hill are calling for stricter rules on Wall Street.
One thing being looked at is the imposition of a “fiduciary standard” on brokers when handling retirement accounts. This would require brokers to act in their clients’ best interests. Many are surprised to hear that brokers may not always be required to act in a fiduciary manner. Yet the fact is that based upon the specific circumstances, some brokers may only be held to a lesser “suitability” standard.
Unfortunately, many brokers cave to the temptation presented by conflicts of interest, such as increased commissions for selling one mutual fund over another. This leads to brokers looking out for themselves, at the expense of their customers. The memo indicates that some investors lose up to 10% of their long term savings because of such conflicted advice.
Given reports that tens of millions of people have savings in retirement accounts that total more than $11 trillion in total assets, it is no surprise that a push to a fiduciary standard for these accounts is gaining steam. Given their age and varying levels of diminished capacity, senior citizens tend to be especially vulnerable to the illicit sales practices of an unscrupulous broker. This makes protecting senior investors a paramount concern.
The attorneys at Malecki Law have significant experience representing victims of investment fraud and negligent financial advisors in arbitration and have successfully recovered millions of dollars on the behalf of individual investors, as well as large groups of investors, who lost money due to inappropriate investment advice.
If you or a family member suffered losses because of inappropriate investment advice, contact the securities fraud lawyers at Malecki Law for a free consultation and case evaluation at (212) 943-1233.