Biden criticizes advisors who prioritize their pay over clients’ returns

investmentnews.com:

President Biden warned financial advisors Tuesday not to recommend high-fee investment products that line their own pockets rather than help their clients build a nest egg, as he promoted a proposal to raise advice standards for retirement accounts.

“Most advisors give their clients good advice at a fair price and are honest with them. But that’s not always the case,” Biden said at a White House event marking the introduction of a Department of Labor rule proposal that would require more advisors to act as fiduciaries and mitigate conflicts of interest when making retirement savings recommendations. “Some advisors and brokers steer their clients toward certain investments, not because of the best interests of their clients but because it means the best payout for the broker. I get it. I understand it. But I just want you to know we’re watching.”

Biden’s involvement in launching the proposal illustrated that it’s one of his priorities. The Obama administration proposed a similar rule that was struck down by a federal appeals court in 2018.

When advisors put their interests ahead of their clients’ best interests, “they’re scamming Americans out of hard-earned money,” Biden said. “When a person pays for trusted advice and it comes with a hidden cost, that’s what I call a junk fee, and I think it’s wrong.”

The 494-page proposal and related amendments to advice regulations are designed to ensure that fiduciary standards contained in federal retirement law — the Employees Retirement Income Security Act — “uniformly apply” to all advice retirement investors receive “from financial professionals who hold themselves out as trusted advice professionals,” the proposal states.

The proposal would define as a fiduciary act a one-time