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The Trump administration is moving to eliminate a rule that was meant to protect people saving for retirement. That rule, approved under President Obama, flatly tells financial advisers that they must act in the interest of their clients. Big financial firms want to eliminate that rule, and they now face a fight against just about every major consumer and retiree advocacy group in this country. NPR's Chris Arnold reports.
CHRIS ARNOLD, BYLINE: In his inauguration speech, President Donald Trump talked about giving America back to everyday, working Americans.
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PRESIDENT DONALD TRUMP: The forgotten men and women of our country will be forgotten no longer.
ARNOLD: But Dennis Kelleher, with Better Markets - it's a Wall Street watchdog group - says that if the Trump administration kills this rule, and it's already taking steps in that direction...
DENNIS KELLEHER: It would be a slap in the face to them if he now sided with Wall Street and big finance above hardworking Americans who are trying to scrape together a few dollars after paying the bills to save for retirement. These are the people who voted for him.
ARNOLD: Cristina Martin Firvida is the director of financial security for AARP.
CRISTINA MARTIN FIRVIDA: This is a top priority for AARP. Make no mistake. This rule is now under attack.
ARNOLD: Firvida explains that at its core, the rule is simple. If you're one of the millions of Americans with a workplace retirement account, such as a 401(k), the Labor Department will soon require financial advisers to act in your best interest. Too often now, she says, your broker or adviser can push you to, say, buy mutual funds that are basically turkeys with really high fees. These mutual funds give the adviser a nice wad of cash though, a commission. So your adviser gets paid more money for giving you bad advice.
FIRVIDA: Individuals saving for their retirement are losing an estimated $17 billion annually because of financial advice that is not in their own best interest.
ARNOLD: The new rule, crafted by the Obama administration, aims to stop that. But firms aren't actually required to comply with the rule until April. And now the Trump administration has directed its Labor Department to re-evaluate the rule. And the Labor Department has submitted a plan to delay compliance. Francis Creighton is with the Financial Services Roundtable. He says the rule will make financial firms vulnerable to too many lawsuits, and that cost will get passed on to their customers.
FRANCIS CREIGHTON: The problem with litigation is a court can essentially have unlimited damages. We don't want anything enforced by trial lawyers.
ARNOLD: But actually, some in the financial industry support the rule. Scott Puritz is with Rebalance IRA. It's an online financial adviser that offers low-fee investment portfolios.
SCOTT PURITZ: The large, established financial firms are for the most part against the rule because it will force them to stop overcharging their clients billions and billions of dollars per year.
ARNOLD: Some industry groups have filed lawsuits to try to block the rule. But earlier this month, a federal judge in Texas ruled in favor of the new regulation, rejecting all of the industry's arguments against it. In fact, four court rulings now have rebuffed industry challenges. And Dennis Kelleher says if this new Labor Department tries to weaken or kill the rule with a flimsy argument...
KELLEHER: Then we will sue them. They can't rip this key safety protection for retirement savings away from the American people without having a substantial valid basis. And if they do, we'll see them in court.
ARNOLD: Meanwhile, many financial firms have been getting ready to comply with the rule by the April deadline. And they're eager to see how all this plays out. Chris Arnold, NPR News.
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