Obama to Middle Class Retirees: If You Like Your Retirement, You Can Keep It

Michael Schaus
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Posted: Feb 24, 2015 12:46 AM
Obama to Middle Class Retirees: If You Like Your Retirement, You Can Keep It

Government’s involvement in healthcare has been such a rousing success, Obama is now thinking about getting more involved in regulating the retirement of Middle Class America. Hooray… Proposing new executive regulatory rules (because going through Congress is too cumbersome and democratic), the President has claimed that he is riding to the rescue of average American investors with the heavy hand of government oversight. According to theState.com:

The proposed rule, which Obama can put in place without congressional approval, would impose a requirement on some financial advisers to act as what the law calls “fiduciaries” for their clients, meaning that when they recommend or sell investments, they would be required to put the clients’ interests ahead of other factors, such as their own compensation or company profits.

Oh and by the way: If you like your financial advisor, you can keep your financial advisor.

So, let me get this straight: Obama wants to make sure that the financial well-being of investors is put before the profitability of investment firms, or the enrichment of financial brokers… In other words, he will codify that “clients are put first”? Who is going to define what is in the best interest of the client? Are we leaving that up to the same folks who think an 85 year old woman should be required to purchase health insurance that includes maternity care?

Obama will call on the Department of Labor to develop a rule that would require retirement advisers to abide by a “fiduciary” standard -- mandating that they put their clients’ interest ahead of making a profit.

Right. Because advisors always make money off of unsatisfied clients, right?

Currently, brokers and advisors are required only to provide their clients with “suitable” investment options. Of course, there’s a reason for that: It’s easy to explain why a 25 year old client can have substantially more risk in their portfolio than a 72 year old retiree… It’s not quite as easy to explain to regulators why a client took a loss in the last downturn, but the firm made a nice commission off of their decision. With government determining what advisors “should” or “should not” be suggesting, portfolio performance will soon be replaced with litigation avoidance (AKA: the most unimaginative, conservative, risk adverse, and low-yield investment options available).

Congratulations, Obama. You’re bringing Obamacare to the investment world.

More important than the impact of Obama’s misguided populist regulatory scheme, is the fact that his endeavor appears quintessentially quixotic. After all, it’s not private retirement accounts that are the problem. I don’t really see private 401k’s dipping into the red, or suddenly declaring insolvency… That seems to be happening to public sector retirement plans.

If you want to save the middle class from malinvestment, mismanagement, and over-promises, maybe we should address the insolvency of public sector employee pension accounts. Private retirements (while they surely suffer some losses during economic downturns) are positively the envy of public sector budgets, which are currently buckling under their projected (and unfunded) liabilities.

So while teachers, firefighters, and the entire public-sector workforce of Illinois watch their socialistic pension plan slip further toward bankruptcy, Obama is concerning himself with “solving” the problem of private sector employees being taken advantage of by “Wall Street sharks”. (Ya know: The same “Wall Street sharks” that donated to his campaign, and are protected by Elizabeth Warren’s major donors.)

I’m sorry, Mr. President: But I like my investment advisor, and I like my investment plan… Unlike my health insurance, I would like to keep both of them.