Perhaps you were not aware that there was a creature called the Middle Class Task Force roaming the halls of the nation's capital. This Task Force is a White House mandated group responsible for reporting on ways to improve the standard of living for America's beleaguered middle class. Reuters reported Friday the task force is announcing, in conjunction with their annual report, new regulations on workers' savings, aimed at protecting employees, their 401(k)'s and IRA retirement savings plans from the potential conflicts of interest of financial advisers.
According to the Reuters report, the new rules will not allow retirement investment advisers or money managers to steer clients toward funds they are affiliated with and receive commissions on. Financial advisers may still guide clients to invest in funds if they can show their advice was based upon an independently approved computer model.
"Some kinds of investments are more profitable for financial institutions than others, but those investments may not be the best ones for workers," the White House said in a briefing document on the proposed rule changes.
Another rule has been proposed that would cover workers' retirement funds covered by collective bargaining agreements. Reuters reports the purpose of this new rule, said Deputy Labor Secretary Seth Harris, was to require retirement plan managers to be responsive to questions by workers or their union representatives about the financial health of their plans.
The health of the middle class itself is of concern to President Obama and Vice President Biden. Mr. Biden voiced his view that the middle class is "nowhere near as strong as it needs to be."
The Labor Department will make the proposed regulations available for public comment until May 5, after which it will issue a final rule. The new rule will then apply to financial advisers who provide investment options like 401(k) plans to employers and offer financial advice to employees as well.