U.S. proposes rules for brokers
Brokers who manage Americans’ retirement accounts may soon be required to put investors’ interests first under new restrictions proposed by the U.S. government.
The Labor Department opened the rules to public comment for 75 days. The Obama administration has put its weight behind the move. Against a backdrop of intense opposition from the financial industry on an earlier proposal, administration officials took pains to reassure the industry that the new framework wouldn’t end the way brokers do business or prohibit them from receiving commissions or other fees.
The proposal would provide “guardrails but not straitjackets” for protecting Americans’ retirement investments, Labor Secretary Thomas Perez said.
The changes would put brokers — who sell stocks, bonds, annuities and other investments — under the stricter requirements for registered financial advisers. Fierce debate and lobbying over the proposal is expected.
The stricter rules could alter the types of investments a broker recommends to retirement account clients. Their advice could move away from riskier investments. And brokers will have to tell clients when they have a conflict of interest regarding a financial product — like receiving fees — that could prevent them from putting a client’s interest first in recommending it.