President Barack Obama wants to make it easier for Americans to save for retirement, announcing an expansion of state retirement plans and reiterating his mission to crack down on brokers’ conflicts of interest in the retirement advice space.
In a speech Monday during the 2015 White House Conference on Aging, President Obama noted that one-third of American workers do not have access to a workplace retirement plan. “We’ve got to make it easier for people to save for retirement,” Obama said, noting that in the past, he’s promoted a plan that would automatically enroll workers in a retirement plan through an individualized retirement account.
But the proposal has gained little traction in Congress, so Obama is turning to the states. “I’ve called on Secretary Perez and the Labor Department to propose a set of rules, by the end of the year, that would provide a clear path forward for states to create retirement savings programs,” Obama announced.
A handful of states already have retirement savings programs, and more than 20 have floated proposals. “If every state did this, tens of millions more Americans could save for retirement at work,” he said.
But industry groups such as the Financial Services Institute have opposed this solution in the past. “State-run retirement plans could take the industry in 'exactly the wrong direction,'" FSI President and CEO Dale Brown has said previously.
“State-run plans will disrupt a healthy marketplace and make it harder for independent financial advisors to continue providing quality, objective financial advice to Main Street Americans,” he said.
Specifically, FSI contended that many of the proposals exclude financial advisors from the list of those eligible to provide advice or support to state retirement plans.
Obama also restated his support for the Labor Department’s proposed rule to ensure that for those Americans already working hard at saving for retirement, they get a fair deal.
“The goal here is to put an end to Wall Street brokers who benefit from backdoor payments or hidden fees, or at the expense of their clients. If they’re advising you on how to save your money, they should be looking out for you, not somebody who is selling a product that may not be best for you,” Obama said.
He went on to say that for the many brokers out there who are doing the right thing, this rule would level the playing field for them and their customers. “The notion here is we want to make sure that responsibility is rewarded and not exploited,” he said.