ECONOMIC POLICY
Insurance lobbyists block federal crackdown on costly retirement advice
The financial services industry has blocked the Biden administration from requiring brokers to put retirees’ needs first — above lucrative commissions.

By Tony Romm
August 11, 2024 at 6:05 a.m. EDT

To protect older Americans’ life savings, President Joe Biden pledged in October to crack down on financial advisers who recommend investments just because they pay higher commissions. Then the insurance industry got to work.

Lobbying groups representing New York Life, Lincoln Financial Group, Prudential Financial and other companies first pushed back against the newly proposed regulations before suing to topple them entirely. Now the government’s latest attempt to protect retirees is in political and legal limbo, facing the possibility that it may never take effect.

It is the latest example of a pervasive pattern: As the Biden administration tries to impose new restrictions on powerful industries, those businesses successfully turn to Congress and the courts for a reprieve. This time, the resulting clash centers on a basic question: Should federal law require more financial professionals to put retirees’ needs above all else — including their own paychecks — when they offer advice about how to invest?

In April, the Labor Department finalized rules that would subject a wide array of brokers to a higher legal standard, requiring them to act as fiduciaries. The effort primarily aims to protect the millions of Americans who leave their jobs, or otherwise need to roll over their retirement savings, and opt for tax-advantaged accounts such as IRAs — transactions that exceeded $770 billion in 2022 alone, according to federal estimates.

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By Tony Romm
Tony Romm is the economic policy and accountability reporter at The Washington Post. Twitter