Proposed Fiduciary Rule Could Save Americans Billions in Fees

(New York, NY) – Earlier this week, President Obama directed the Department of Labor to begin the rulemaking process for a fiduciary rule, a new regulation that would require financial advisors and brokers to act in the best interest of people saving for retirement. In the new explainer Why the Fiduciary Rule Matters, Demos Senior Policy Analyst Robert Hiltonsmith finds that this new regulation could save Americans nearly $25 billion from lower fees and translate into an additional $60 billion in returns.

“The financial services industry is using outdated rules that haven’t been updated in more than four decades to take advantage of hardworking families,” said Hiltonsmith. “This new rule would help strengthen our retirement system and better enable America’s families to retire with economic security.”

Hiltonsmith has been tracking this since 2012, when he found that these outdated rules were preventing U.S. families from adequately saving for retirement, costing median-income, two-earner households nearly $155,000 over their lifetimes in 401(k) fees. In 2013, he estimated that retirement savers paid a total of $73 billion in fees or an average of 0.6% of their total assets. Under the proposed rule, these fees would plummet, as investors would be steered away from high fee actively-managed mutual funds and annuities in which many currently invest to lower fee investments.

Robert Hiltonsmith is available to comment. To set up an interview, email [email protected].

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Additional Materials:

• Expanded Social Security: A Plan to Increase Retirement Security for All Americans
• The Retirement Savings Drain: Hidden and Excessive Costs of 401(k)s
• Reforming the 401(k)

Contact:

Nikki Cannon, Demos
[email protected]
(212) 485-6012