Biden’s Bold Move: A New Rule to Safeguard American Retirement Savings

In a significant move to bolster the financial security of Americans, President Joe Biden’s administration has proposed a new rule designed to protect individuals from being exploited by unscrupulous financial advisers. This proposal aims to ensure that retirement savers receive advice that genuinely serves their best interests, rather than being misled by advisers driven by personal gain.

People are tired of being played for suckers.

President Biden

Background of the Proposal

Announced on October 31, this initiative by the Department of Labor seeks to close governance loopholes and enforce a more stringent standard on financial advisers. President Biden, emphasizing the need for fairness, stated, “People are tired of being played for suckers.” This sentiment captures the essence of the proposed rule: to shield Americans from bad financial advice that can significantly erode their retirement savings.

The Problem at Hand

The Biden administration has identified that some financial advisers, driven by conflicts of interest, recommend investment products that yield high commissions for themselves but generate poor returns for their clients. One prime example is fixed index annuities, which are often laden with conflicts of interest and could cost retirement savers as much as $5 billion per year.

The Proposed Solution

Under the new rule, all financial advisers providing retirement advice and selling retirement products would be required to have a fiduciary duty to act in their clients’ best interests. This rule would extend beyond the Securities and Exchange Commission’s Regulation Best Interest (Reg BI), covering advice related to commodities and insurance products, like fixed index annuities.

Implications for Retirement Security

This proposed change could have far-reaching implications for Americans planning for retirement. It’s estimated that bad financial advice can cost a retiree up to 1.2% per year in lost investment, translating to 20% less money at retirement. For a middle-class household, this could amount to tens of thousands of dollars over time.

Closing Loopholes in Retirement Advice

One of the key aspects of this rule is its attempt to close the loophole around one-time advice, such as recommendations to rollover assets from a 401(k) plan into an IRA or annuity. Currently, this advice is not required to be in the saver’s best interest. With the new rule, one-time advice regarding rollovers would need to prioritize the saver’s interests.

Accountability and Penalties

Should advisers breach their fiduciary duty under this new rule, they would face serious consequences, including restitution and additional financial penalties. This accountability aims to deter advisers from prioritizing their financial gain over their clients’ needs.

Enhancing 401(k) Advice

The proposal also aims to build upon legislation passed last year to protect workers from losing money when enrolling in a new employer’s 401(k) plan. It seeks to ensure that advice provided to plan sponsors, including small employers, about which investments to include in 401(k) and other employer-sponsored plans, is in the best interest of the participants.

The Importance of Trusted Financial Advice

The significance of this rule cannot be overstated. As Joanne Jenkins, CEO of AARP, highlighted at the press conference, “Tens of millions of people across the country have invested their hard-earned money into retirement accounts. They need to be able to trust their financial advisers to give them the advice that is solely and completely in their best interests.”


President Biden’s proposed rule represents a crucial step in safeguarding the retirement savings of Americans. By ensuring that financial advisers act with fiduciary responsibility, the administration is not only protecting individuals’ investments but also reinforcing the trust essential in the adviser-client relationship. As we navigate the complexities of financial planning for retirement, this rule could be a game-changer, offering peace of mind and financial security to millions of Americans.

Disclaimer: The information presented in this article is for informational purposes only and is not intended as financial advice. Always consult with a qualified financial adviser for personalized advice and recommendations.



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