WASHINGTON (AP)—President Donald Trump is delaying a series of rules that require financial professionals to put their clients’ best interests first when giving advice on retirement investments.
The rules, which were set to take effect in April, will be delayed for 90 days for review.
Under the so-called “fiduciary rule,” brokers who sell stocks, bonds, annuities and other products would have to do more than just make sure the investments they recommend are “suitable” for clients. They would have to meet a stricter standard that has long applied to registered advisers: They will be considered “fiduciaries”— trustees who must put their clients’ best interests above all.
Full compliance originally was required by January 2018.
At stake are about $4.5 trillion in 401(k) retirement accounts, plus $2 trillion in other defined-contribution plans such as federal employees’ plans and $7.3 trillion in IRAs, according to the Investment Company Institute.
Too often, regulators say, brokers steer clients toward questionable investments for which the broker receives a fee, thereby acting in their own financial interest instead of the client’s.
The problems often arise when people who are retiring “roll over” their employer-based 401(k) assets into individual retirement accounts. Brokers may persuade them to put those assets into variable annuities, real estate investment trusts or other investments that can be risky or otherwise not in the client’s best interest.