Money

A Trump Administration move could cost savers $10.9 billion: Report

President Donald Trump
Andrew Harrer | Bloomberg | Getty Images
President Donald Trump

Changes under the Trump Administration may affect your retirement planning.

One change in particular — the administration's proposed 18 month delay of full implementation of the fiduciary rule — could cost retirement savers $10.9 billion over 30 years, the Economic Policy Institute estimates in a 2017 report.

"Retirement savers in every state will lose money if there is a delay in the full implementation of the fiduciary rule," the EPI writes. "Losses from the additional delay, which will persist and compound long after the delay ends, range from $804.9 million in California to $10.4 million in Wyoming."

The fiduciary rule, which was one of the Labor Department's achievements under former President Barack Obama, requires financial advisors to act in the best interests of clients when it comes to overseeing retirement accounts.

The Obama administration had estimated that it would save retirement investors about $17 billion a year in hidden fees and lost earning potential.

The Trump administration already delayed implementation of the rule once earlier this year.

"Implementing the fiduciary rule sooner rather than later benefits consumers," certified financial planner at Personal Capital Michelle Brownstein tells CNBC Make It, "because it legally requires financial advisors to give advice in the best interest of their clients when advising on retirement accounts.

"I don't know anyone who would choose to go to a doctor that hasn't taken the Hippocratic oath to 'do no harm,' so taking financial advice from someone who does not have to act as a fiduciary to you is something I would not condone."

Opponents of the rule argue that it will limit customers' investment options and increase costs for the financial advisory industry.

If the delay is approved, financial firms would have until July 2019 to make tweaks.

It's important to understand what "fiduciary" means, especially if you're looking to pay for financial advice. A fiduciary has a legal duty to act in your best interest. Those not working to that standard are held only to a "suitability" standard, meaning their advice must be suitable for your financial situation.

"I don't know anyone who would choose to go to a doctor that hasn't taken the Hippocratic oath to 'do no harm.'" -Michelle Brownstein, CFP, Personal Capital

The fiduciary rule is specific to retirement accounts, which include 401(k) plans, individual retirement accounts (IRAs), and other tax-deferred accounts, such as health-savings accounts.

When it comes to other financial advice, if you're paying a professional, you'll want to make sure you're dealing with a fiduciary.

To be sure you're getting the best advice, "You need to ask and ask quite specifically: Do you work to the fiduciary standard at all times?" professor Harold Pollack and financial journalist Helaine Olen write in their book, "The Index Card." "This last part, 'at all times,' is important. As the fine print on brokerage forms indicates, the fact that an advisor commits to a fiduciary standard for some of her dealings with you does not hold her to this standard in others."

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