Category Archives for Retirement

AARP Pushes for Higher Standards When it Comes to Financial Advisors

Published in Woonsocket Call on June 28, 2015

AARP continues its efforts to push for a proposed U.S. Department of Labor (DOL) Fiduciary Rule that would require financial advisors to put their client’s interests first when giving retirement advice.  In advance of last weeks hearing, before the House Education and Workforce Committee, the nation’s largest aging advocacy group delivered nearly 60,000 petitions containing the signatures from every state to support a higher standard in financial advising to prevent conflicts of interest.    .

In a June 16 release, the Washington, D.C.-based AARP stated that the June 27th Congressional hearing only showcased financial firms and their concerns, but did not provide much of an opportunity to hear directly from consumers about how the new proposed rule would benefit them.  But, AARP’s petitions drive should send a powerful message to Congress, that the nonprofit group, representing 37 million older Americans, and 60,000 voters identified on those petitions want to have their voices heard by Congress on this very pressing retirement issue.

When Advising, Do No Harm

“While a number of investment advisers also support a rule requiring advice to be in the best interest of clients, some opponents have recently weighed in with comments that offer time worn code words for harming consumers,” said Nancy LeaMond, Chief Advocacy and Engagement Officer, AARP.  She says that the delivered petitions would ensure “that all, not just some, financial advisers put their clients’ interests first.”

“Many opponents of the proposed new rule, who are asking for delays or say the regulatory costs are too high, are simply looking to protect high fees at the expense of consumers.  But consumers deserve advice in their best interest, not advice that benefits the adviser,” says LeaMond.

In addition to forwarding petitions to the Department of Labor, AARP volunteers continue their efforts to call on Congress to prevent legislation that seeks to stop or slow an updated “best interest” standard.  According to the AARP, “each year hidden fees, unfair risk and bad investment advice rob Americans of $17 billion of retirement income.”

LeaMond says that AARP plans to submit comments to the DOL on the proposed rule in the weeks ahead. The nonprofit group’s petition delivery included over 33,000 signatures and follows an initial petition delivery last month that included over 26,000 signatures that support eliminating conflicts of interest in retirement advice.  “It is important that the Department hear from individuals who are negatively impacted by the current standard, not just financial firms who benefit from it,” she said.

AARP’s petition drive efforts followed President Obama’s February visit to AARP Headquarters where he used the opportunity to publicly support the proposed DOL rule, endorsed by a coalition of aging, labor and consumer groups that limits conflicts of interest, increases accountability, and strengthens protection for Americans receiving retirement investment advice.

At the AARP press event, Obama called for the updating of DOL rules and requirements that would mandate higher standards for financial advisors, requiring them to act solely in their client’s best interest when giving financial advice.

Obama noted that the existing rules governing retirement investments written over 40 years ago “outdated,” filled with “legal loopholes,” and just “fine print,” to be in need of an overhaul.  The existing rules governing retirement investments were written “at a time when most workers with a retirement plan had traditional pensions, and IRAs were brand new, and 401ks didn’t even exist,” said the President.

According to Megan Leonhardt, senior editor for WealthManagement.com, in a June 15th article, “New Coalition Pushes for DOL Fiduciary Rule,” DOL’s proposed rule has “been delayed multiple times since the agency first rolled it out in 2010.  It was expected to be released in August according to the agency’s regulatory agenda, but an update in May pushed back the date to January.”

“Industry lobbyists have mounted significant pushback. The Securities Industry and Financial Markets Association and the Financial Services Institute have argued a rule similar to the DOL’s initial proposal could limit the public’s access to quality financial advice,” says Leonhardt.

Acting in the Client’s Best Interest

“Rhode Island has been part of the national effort to move the Labor Department rule forward,” said AARP Rhode Island State Director Kathleen Connell. “We’ve talked to people who have been quite surprised to know that their savings could be at risk by having an adviser fail to act in their client’s best interest. The response to the petition campaign is a measure of the concern. Retirement planning is daunting for the vast majority of Rhode Islanders. There’s plenty to worry about. Having confidence that your financial adviser is working in your best interest would relieve some of the anxiety.  That’s why there seems to be overwhelming support for the rule change.”

Along with AARP, Rhode Island federal lawmakers are weighing in on this key retirement issue, seeing its importance to older Rhode Islanders.

Rep. David N. Cicilline (D-RI) says, “Protecting the financial well-being of our seniors is a top priority for me, and ensuring that they have access to complete and accurate information before making investment decisions is an essential component of that effort.  President Obama and Labor Secretary Perez are leading a good faith effort to protect consumers, including seniors and I look forward to evaluating the final rule after the public comment period ends and I have had the benefit of considering these comments.”

Adds, U.S. Senator Sheldon Whitehouse (D) “Investors should have the security of knowing that the advice they receive is in their best interest.  I applaud the Obama Administration for updating regulations on retirement investments and for working with a wide range of stakeholders to ensure the new rules help Americans save more for retirement.”

For this writer, hiring a financial advisor is like purchasing a used care, that is you always feel that you might have made the wrong decision.   New DOL requires that call for higher standards for financial advisors, who would be required to act solely in their client’s best interest when giving advice, just might give me peace of mind, when planning my retirement…and probably to millions of older Americans, too.

Herb Weiss, LRI ’12, is a Pawtucket-based writer covering aging, health care and medical issues.  He can be reached at hweissri@aol.com.

Protecting Retirement Savings Should Be a Priority

Published on March 7, 2015 in the Pawtucket Times

Last month, President Obama used his presidential bully pulpit to publicly support a proposed U.S. Department of Labor (DOL) rule, endorsed by a coalition of aging, labor and consumer groups, that reportedly limits conflicts of interest, increases accountability, and strengthens protection for Americans receiving retirement investment advice.

At the February 23 press conference held at the Washington, D.C.-based AARP headquarters, attended by Obama, Save Our Retirement Coalition members and lawmakers, the President called for the issuing of the proposed rule, still awaiting Office of Management and Budget (OMB) review and final DOL action. The updating of DOL rules and requirements would require higher standards for financial advisors, requiring them to act solely in their client’s best interest when giving financial advice, said Obama.

The Save Our Retirement Coalition says that the final rule is “needed to help protect Americans’ hard earned retirement savings from advisers who recommend investments based on their own interest – such as those that pay generous commissions – not because they serve their clients’ best interest.”

Existing Rules Outdated

In his remarks at AARP, Obama called the rules governing retirement investments written over 40 years ago “outdated,” filled with “legal loopholes,” and just “fine print,” needing an overhaul.  The existing rules governing retirement investments were written “at a time when most workers with a retirement plan had traditional pensions, and IRAs were brand new, and 401ks didn’t even exist,” the President explained.

At the event, Secretary of Labor Thomas E. Perez., claimed that his agency has substantially reached out to “a wide range of stakeholders,” to craft the proposed rule that was sent to OMB.  “The input we have received to date has been invaluable, but we’re not even close to being done. We have a lot more listening to do, and once the Notice of Proposed Rule Making is published in the coming months, I look forward to hearing from as many stakeholders as I can. We’re going to get this right, because the strength of the middle class depends on a secure retirement,” he says.

“We know the people we represent have worked hard to save for retirement, and we believe that they deserve to have financial advisers who work just as hard to protect what they’ve earned,” said AARP CEO Jo Ann Jenkins, in her remarks.  AARP is a member of the Save Our Retirement Coalition.

“AARP, a major consumer advocate, has been fought for this consumer regulation for over five years to ensure that Americans of all ages get the best financial advice when planning for their retirement,” says Jenkins. “Recently AARP also found that 9 out of 10 employers who sponsor retirement savings plans support holding advice to such a ‘best interest’ standard,” she adds. .

“In today’s world, it’s hard enough to save for retirement and achieve your financial goals” added Jenkins. “We don’t need to make it more difficult by allowing some on Wall Street to take advantage of hard-working Americans. Bad financial advice is just wrong,” she says.

According to Save Our Retirement Coalition, “the need for the proposed rule was made starkly apparent in a White House report released showing that conflicts of interest are costing middle class families and billions of dollars annually. The 30 page report, released last month, details the current regulatory environment for financial planners, providing evidence on the negative financial impact of conflicted professional investment advice draining older American’s retirement saving accounts.

The White House report, issued by Council of Economic Advisors, cited evidence pulled from the literature, showing that “conflicted advice reduces investment returns by roughly 1 percentage point for savers receiving that advice” The report also found that “a retiree who receives conflicted advice when rolling over a 401 (k) balance to an IRA at retirement will lose an estimated 12 percent of the value of his or her savings if drawn down over 30 years.  For those receiving conflicted advice “takes withdrawals at the rate possible absent conflicted advice, his or her savings would run out more than 5 years earlier.”

Holding Wall Street Accountable

“Many investment professionals do what’s right,” said AARP Rhode Island State Director Kathleen Connell. ”But loopholes in the law are allowing some on Wall Street  to take advantage of hard-working Americans, recommending investments with higher fees, riskier investments, and lower returns to make even higher profits for themselves. Last year alone, hidden fees, unfair risk and bad investment advice robbed Americans of as much as $17 billion,” she states.

“AARP agrees that financial professionals of all types serve a valuable role in building the wealth and security of the investing public,” added Connell. “We simply want to achieve some consistency in the standards across the industry. Here is Rhode Island, many retirees are very concerned about their investment savings and they deserve protection. Our position is that retirement accounts managed by a broker should receive the same protections as regular investment accounts held with an advisor,” she says.

“Rhode Islanders have who have worked hard for their money and deserve a new standard that holds Wall Street genuinely accountable for helping them choose the best investments for themselves, their family and their future,” she adds.

Security Trade Group Concern

             The Securities Industry and Financial Markets Association (SIFMA), a trade group representing securities firms, banks and asset management companies, is waiting to see the details of the proposed rule.  SIFMA CEO Kenneth E. Bentsen, Jr., stated: “While we cannot comment on a proposal we have not yet seen, we have ongoing concerns that the DOL regulation could adversely affect retirement savers, particularly middle class workers.  The new regulation could limit investor choice, cause inconsistencies as different regulators would apply different standards to the same regulatory accounts, prohibit guidance, and raise the costs of savings for retirement.”

But, both Obama and the Save Our Retirement Coalition strongly disagree with SIFMA’s assessment of the potential impact of DOL’s proposed rule, which has not yet been issued and is ultimately subject to change after the public comment period.

A large majority of financial planners put their clients first when giving them investment advice. But, as you know a few bad apples can truly spoil the barrel.  If trade groups representing financial planners fail to act to rein in financial planners who give conflicted advice to pad their pockets, than federal regulations can quickly do that job by applying “simple, commonsense standards.”

It makes practical and political sense to me.

Here is a linked to President Obama’s comments at the AARP Press Conference: http://www.whitehouse.gov/photos-and-video/video/2015/02/23/president-obama-speaks-aarp.

Herb Weiss, LRI ’12 is a Pawtucket-based writer who covers aging, health care and medical issues.  He can be reached at hweissri@aol.com . Or call 401/ 742-5372.

It Takes a Village to Age in Place

Published in Senior Digest, February 2015

The simple act of joining his good friend, Reverend James Ishmael Ford, of the First Unitarian Church of Providence, for a quick cup of coffees piqued Cy O’Neil’s curiosity and led him on a journey to learn more about a new care option popping up around the nation, one that allows aging baby boomers to age in place right in the comfort of their home.

During their coffee chats, Ford, a native of California, began talking about his upcoming retirement, planning to return to his home state to be near his children.  But, he stressed the importance that his new California community must be located near a village.

O’Neil was intrigued and began Googling for information on specific villages, one was the The Beacon Hill Village.  He quickly got the concept.  Villages are created by membership-driven grass-roots organizations, with volunteers and paid staff, who coordinate access to affordable services, transportation, health and wellness programs, home repairs, social and educational activities, and other day-to-day needs enabling older persons to remain connected to their neighborhood community throughout the aging process.

According to Village to Village Network, there are now over 120 villages operating across the nation, in Canada, Australia and the Netherlands, with over a 100 additional Villages being developed.

Like many aging baby boomers, sixty-five-year old O’Neill did not want to leave his comfortable home in his later years, but stay put in his long-time Oakhill neighborhood.  The Village on Providence’s Eastside might just be the way to assist neighbors working together to successfully keep each other right in their homes, far away from assisted living facilities or nursing homes.

Creating Providence Village

Last February, O’Neill and several friends, over pot luck dinners, began  brainstorming how the Village concept could be brought to the Ocean State. One of the oldest Village organizations, The Beacon Hill Village, was established in Boston in 2001.  Why couldn’t the successfully run, The Beacon Hill Village, be replicated right here in Rhode Island, they asked.

Three pot luck dinners along with a larger event that drew over 30 attendees, resulted in a group of nine people who decided to launch an effort to create what they call the Providence Village.  This group consisted of a writer, editor, a geriatrician, college educators and administrators, people with business backgrounds, and artists.

“Rhode Island is the only state that does not have a village yet,” quips O’Neil.  There have been other attempts to bring The Village concept to Rhode Island but the failed,” he believes.

O’Neil, Boston College’s associate director for long-range planning and capital, notes that the Providence Village is still in the exploratory phase, gathering information.  The Steering Group is reaching out to Eastside Community in Providence through a survey on its website (http://providencevillageri.org/take-our-survey/) to identify the types of programs and services needed and identifying potential partners.  When completed, the Steering Group will move the organization into development phase where “serious planning begins to take place,” adds O’Neil.  At this phase, member benefits will be determined, organizational partners identified, and an operational, business and marketing plan developed.  .

“So far our responses have been very positive,” observes O’Neil.  “We’re energized by these responses and are very committed to rolling up our sleeves to make Village Providence work,” he says, noting that the Steering Group wants to create more opportunities to get more people involved to make Providence Village a reality.

Thoughts From Steering Group Members

Pat Gifford, MD, a retired geriatrician who is certified in hospice and palliative care who has practiced for over 30 years, brings her medical expertise and understanding of aging issues to the Steering Group.  The sixty-six year old Laurel Mead resident sees the village movement targeted to aging baby boomers.  “The Village is not a social service agency to take care of frail people,” she notes, but a “way of organizing people to take care of each other, often involving volunteering and a measure of paying-it-forward.”

Gifford, who brings extensive experience about the Village movement to the Steering Group, would like to write and teach on health and wellness issues for the members of the Providence Village, especially providing support to self-supportive groups for those with chronic diseases.  “It’s up to the Board of Village members if they are interested in these efforts,” she says.

According to Gifford, the key to Providence Village being a success is garnering strong grass roots support.  “It is important for people to go to visit our web site and complete our survey, so that we can understand the needs and desires of our unique community,” she adds.

A Final Note…

“The village movement is one of many approaches to senior living that AARP encourages,” said AARP State Director Kathleen Connell. “It’s impractical for many people to simply remain in the family homestead forever. It’s not ‘Aging in Place’ if the place isn’t right for you. Most people talk about downsizing as if it is all there is to be said about housing options. It’s not true, and we’re happy to see growing awareness that less house to maintain is really only part of the solution.

“One’s house and one’s home are two different things. You can choose another house, but people are most comfortable when they make a new home in an environment where they feel comfortable and live in proximity to the services and support they require as they age. AARP calls these livable communities and they are aligned with the thinking behind the village movement.

“Rhode Island does not have unlimited space to build new retirement communities. We need a balance of traditional senior housing development and the creative thinking and the adaptive use of existing housing.“

For more details about Providence Village go to http://providencevillageri.org/.

Herb Weiss, LRI ’12, is a Pawtucket writer covering aging, health care and medical issues.  He can be reached at hweissri@aol.com.