The Main Street Alliance, a national network of state-based small business coalitions, is applauding the Department of Labor (DOL) for issuing a final rule that protects Americans from the harmful effect of conflicts of interest when financial advisors and brokers provide retirement advice. At long last, all financial professionals who provide retirement advice will be required to put their clients’ interest ahead of their own. Currently, backdoor payments and hidden fees often buried in fine print hurt the middle class, including small business owners. These conflicts cost about 1 percentage point in annual returns on retirement savings, approximately $17 billion of losses every year.
The DOL rule will help small businesses, their workers, and their families by preventing financial advisors from pushing high-fee investment plans on low-dollar investors, many of whom own businesses. The Main Street Alliance strongly supports the rule and urges Members of Congress to oppose any attempt by the financial industry to block its implementation.
“When small business owners make retirement investments they need to be confident that the advice given by professionals is in their best interest. Advisors chasing bonuses and incentives lead investors down the path that is most profitable to them, putting their profits ahead of their clients’ interests. It is this type of chicanery that led us to the market collapse in 2007 that devastated small businesses and communities, and we welcome the administration’s Fiduciary Standard–a rule that shakes up business as usual on Wall Street and promotes a fairer and more equitable retirement investment process,” said Amanda Ballantyne, National Director of the Main Street Alliance.
“The Fiduciary Standard ensures that financial advisors have their clients best interest at heart and would make our customers more financially stable—which is critical to the success of our businesses,” said Jim Houser, co-owner of Hawthorne Auto Clinic in Portland, OR. “After all, what businesses need most to create more jobs, and get the economy back on track is more customers—and if all Americans can safely save for their retirement years, and have more money in their pockets, that’s more that gets spent in our local businesses.”
The Main Street Alliance emphasizes the fact small business owners rely on sound investments to secure their retirement and the new rule will help ensure the advice they seek is in their best interest, not the best interest of the advisor.
“I hope to be in a secure enough financial situation to be able to retire someday and I am a firm believer that my employees deserve that same right. My employees are my greatest asset as a business owner, since they are taking care of our business with me. I welcome new rules aimed at securing retirement investments and ensuring funds are managed in the best interest of my business and my employees,” said Molly Sumner, owner of Kindred Companions and Yellow Dog Pet Supply in Frenchtown, NJ.