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Lesko: Will New Rules Protect Retirement Savers?

Jason: The government has new rules to protect those saving for retirement.
Greg Lesko of Lesko Financial explains why. Greg.

Greg: Thanks Jason. The ways people save for retirement today are very different than they were 41 years ago, when the Labor Department put rules in place to protect retirement nest eggs.

Back then, people mostly saved through workplace pensions. Today, retirement savings are more of an individual responsibility, and the wide range of investment choices can be intimidating. The updated rules are aimed to protect retirement savers from overly- aggressive marketing pitches by brokers.

Jason: What do the new rules say?

Greg: They require brokerage firms and financial advisors to sign a contract promising they will act "in their client's best interests." They must also agree to "come clean" on potential conflicts of interest in charging commissions.

Jason: Aren't they supposed to be doing that anyway?

Greg: Yes, of course they are. And the reputable firms already do. But some companies and individual advisors try to push certain products solely for profit. It's especially true with 401k rollovers-- which account for a large amount of money.

The companies may try to "skirt" their responsibility by putting disclaimers in the "fine print"-- especially when it comes to one-time-only clients. The new rules hope to remedy any abuses.

Jason: Will they succeed?

Greg: They'll most likely help. They didn't prohibit commission-based services, which some in the industry feared. Also, consumer groups are worried that financial firms may decide the new rules make it not-worth-their- trouble to handle smaller mom-and- pop investors. But for those of us who have always made fiduciary reponsibility a priority, there won't be any significant changes.