By: Jack WaymirecloseAuthor: Jack Waymire Name: Jack Waymire
Email: jack@paladinregistry.com
Site: http://paladinregistry.com
About: Jack writes for the InvestorWatchdog website and Worth magazine. He worked in the financial services industry from 1976 to 2004. For twenty of those years he was the president of a Registered Investment Advisory firm and a Broker/Dealer. Jack is the author of Who's Watching Your Money? The 17 Paladin Principles for Selecting a Financial Advisor and is a co-founder of PaladinRegistry.com.See Authors Posts (87) | November 20, 2009 | Conflicts of Interest, The Politicians

The Department of Labor recently withdrew a new rule that would have allowed financial advisors, who acknowledge they are fiduciaries and work for fees, to give advice to 401k participants.

As Jason Roberts, an attorney at Reish and Reicher, said, “It seems like someone in Congress gave the DOL an order to stand down.” In my opinion, Wall Street lobbyists lined the pockets of key politicians on the right committees to get the rule withdrawn. Billions of dollars of fees and commissions were at stake if Wall Street’s legions of commission sales reps did not have had access to the trillions of dollars that are owned by 401k participants.

Wall Street sales reps already have access to plan trustees who are supposed to be smarter than plan participants. But, the trustees’ lack of knowledge makes them easy targets for sales reps from broker/dealers and insurance companies. The fiduciary advisor rule created a major risk for Wall Street because the advisors would be in a position to influence the investment decisions of plan participants and critique the decisions of the trustees. Billions of dollars of fees and commissions were at stake.  There is no question plan participants need help allocating assets, managing risk, selecting funds, and making strategic changes over time. They do not have the knowledge to do this work themselves. How important is this rule? It will determine the standard of living for millions of participants during retirement and their financial security late in life.

So what is the solution? Computer programs? Cookie cutter solutions based on participant ages? The solution is the fiduciary advisor who is compensated to advise participants with large and small account balances.