The Lack Of Fiduciary Standards And Other Threats To Retirement Security In 2011

The lack of fiduciary standards, possible defunding of the new law for health reform

, and unemployment are just some of the threats to retirement security in 2011. Aside from the misconceptions surrounding Social Security, these issues are obstacles to the financial goals of Americans from the lower income brackets all the way to the upper tiers.

Fiduciary Standards

Regulators were thrown a heavy-hitting question because of the Dodd-Frank Act: should insurance and stockbrokers meet what are called, fiduciary standards and ensure that they place the needs of clients above their own? If so, how will this be quantified? Wall Street was against this concern turning into legislation that could very well be disadvantageous to them and their profit margins, and now, the SEC or Securities Exchange Commission is mulling the issue over for half a year. RIAs or Registered Investment Advisers are bound by these standards, while firms in Wall Street and those who provide insurance coverage say this is going to be counter-productive due to higher costs of compliance and lower profits. Wall Street, along with the insurers, side with the blurrier suitability standard and would rather have this in place of fiduciary standards.

There are many professionals who find fault with the suitability standards and using these instead of fiduciary standards to regulate how stockbrokers and insurers operate. Some find that the closest they could come to a definition of the suitability standards is how reasonable these are. Even so, these standards only oblige reasonability at the moment the investment is made, and not necessarily in the following weeks, months, or years. In addition, current standards do not cover where the invested money comes from which many advisers were found to have scooped out money from a relatively stable, federally insured pension and placed into much riskier variable annuities. Does this fall within what is defined as reasonable?

Threats to Health Reform

The health reform law, which may mean the difference between a stable retirement and one with inadequate funds, is under attack from the Republican party. The faction wants to nip the law in the bud via pulling out funds, arguing about its legality, and other means. Strangely, these people were pushed partly into killing the law by retirees who were thinking about Medicare, despite the law being positive for seniors overall. In addition, the ACA or Affordable Care Act, part of the new law, will aid millions of older employees (who have yet to qualify for Medicare) gain access to good healthcare coverage this is another issue that compounds the concerns of the lack of fiduciary standards and other threats to retirement security in 2011.

by: Katherine Smith

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