The study, commissioned by the
Without that advice, more workers would be likely to cash out their plans upon leaving a job, rather than rolling them over to an IRA or staying with the employer's plan.
The study estimates that those cash-outs would add up to between
The fiduciary rules would aim to crack down on what
But barring the payments brokers receive from funds for marketing, record-keeping and other services would blow up the entire business model of many brokers and the smaller and midsize IRAs that cannot afford to work with advisors, according to
Borzi has insisted that the rules are not aiming to regulate any specific business model, but rather that the department is more narrowly trying to protect the integrity of the advice that investors receive.
Mason isn't buying it.
"The message is that she's saying that the brokerage model needs to be modified," he says. "People are going to have to materially change their arrangements."
A spokesman for the
That's small solace to the brokers with a business model primarily staked around revenue-sharing arrangements with funds, rather than commissions.
"We have heard that there may be some small exemption with respect to the revenue sharing," Mason says. "But based on what we've heard, the analysis that I would give is if a bulk of your compensation is coming from revenue sharing, and the bulk of it is illegal, that doesn't help you very much."
In addition to the crackdown on conflicts, the fiduciary proposal would require advisors serving the retirement market to act in their clients' best interests. Mason says that the firms he represents aren't objecting to those provisions.
"If they're not giving advice in their clients' best interest, they're not going to have those clients. That aspect of it is not controversial," he says.
But without a provision that would permit the current revenue-sharing model to continue provided advisors disclosed their material relationship with investment vehicles, Mason says his firm will continue to lobby against the rules.
The new study, conducted by Quantria Strategies, projects that if the
Without a professional to lay out their options, many workers would opt to cash out their plans rather than roll them over to an IRA or remain in their current fund, the study concludes. It also finds a strong correlation between retirement savings and professional advice: according to Quantria's model, individuals with financial assistance maintain retirement savings balances that are 33% higher than those who don't.
The reason is simple, the way Mason tells it. For many middle-income households living under a budget and without an advisor, retirement savings will take a backseat to the day-to-day expenses of groceries, gas and rent.
"People with access to financial assistance have far greater retirement savings," Mason says. "I think the huge thing the
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