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.

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Poll Calls Upon Congress to do “the people’s work”

Published in the Pawtucket Times, January 10, 2014

Four months ago, public anger reached a boiling point when the Republican-led House, controlled by its minority faction of Tea Party members, and the Democratic majority in the Senate failed to agree to an appropriations continuing resolution.
As a result of this budget impasse, a 16 day federal shutdown forced the furlough of 800,000 federal employees and another 1.3 million were required to report to work without known payment dates.

Public polls at that time blamed the GOP for turning its back on the nation by putting partisan politics first rather than doing the People’s business.” The popularity of Congress sank to a new historic low with heated partisan conflict echoing throughout the hallways of Congress.

Hammering Out an 11th Hour Deal

Senator Ted Cruz (R-Texas) with the blessings of conservative groups, including the Heritage Action, the Club for Growth, Freedom Works, and the Senate Conservatives Fund, forcefully pushed House Speaker John Boehner (R-Ohio) to offer continuing resolutions not acceptable to President Obama and Congressional Democrats to politically force a delay or to defund the Patient Protection and Affordable Care Act (called “Obamacare”). Strong GOP opposition, spearheaded by Tea Party lawmakers, to raising the nation’s debt ceiling almost forced the government to run out of money to pay its bills.

After weeks of intense political bickering, Congress finally hammered out a political compromise, one that would open the doors of government, but also raise the debt ceiling to keep the nation from free-falling off the fiscal cliff. A failure to raise the debt ceiling could have resulted in the nation’s credit rating being downgraded. If this occurred, average Americans might have seen higher interest rates for mortgages, car loans, student loans and even credit cards. Higher business expenses, due to expensive borrowing rates, might have forced businesses to stop hiring or even to lay off employees. Housing prices might have drop and retail sales slow. The 11th hour compromise kept the American tax payer and business community from taking a huge hit in their pocketbook.

Although Cruz and Tea Party lawmakers in both chambers viewed shutting down the federal government and not raising the debt ceiling as a way to put excess government spending on the chopping block economy, there was economic damage. According to the economists at Standard & Poors, the total cost of the political gridlock to the nation’s economy that occurred before Christmas was estimated to be $24 billion.
Americans Lack Confidence in Congress

With the new Congressional session beginning this month, a new national poll released last week by AP-NORC Center for Public Affairs reveals that few Americans have faith in the current political status with Congress receiving low marks on its performance of upholding the views of most Americans while only 9 percent say it is doing a good job.

According to the poll that comes months after the first government shutdown in 17 years, 70 percent lack confidence in the federal government’s ability “to make progress on important issues facing the nation in 2014.”

However, the poll findings indicate that the respondents have a little bit more faith in their local and state governments, with 45 percent saying that they are at least moderately confident in their state government and 54 percent having at least moderate confidence with elected officials at the local level.

The federal government receives low marks on its performance. For instance, 55 percent believe the government is doing a poor job of representing the views of most Americans while only 9 percent say it’s doing a good job.

Meanwhile, the poll’s results find Americans are more pessimistic than optimistic on matters such as the nation’s ability to produce strong leaders, America’s role as a global leader, and the opportunity to achieve the American dream.

The People’s preferred agenda for the government in 2014 includes a diverse set of policy issues that range from economic problems to social policies to foreign affairs, notes the poll. Health care reform tops their list of priorities, mentioned by 52 percent of respondents as one of the top ten problems, followed by unemployment (42 percent), the economy in general (39 percent), and the federal deficit (31 percent).

“While it is very easy to ask people to choose a single ‘most important problem’ and to build a list for the answers, the reality is that government has to address many issues at the same time,” said Trevor Tompson, director of the AP-NORC Center. “This survey, with data about the public’s priorities on a range of policy issues, provides policy makers with rigorous data as they seek to understand the public’s outlook on where the country is now and what the action agenda should be for the year ahead.”

Wendy Schiller, Associate Professor of Political Science and Public Policy at Brown University, notes that the AP-NORC poll reveals “broader concerns expressed in national opinion polls, and by the average Rhode Islander “that our country seems to be slipping on lots of levels.”

Schiller, a frequent guest on Rhode Island PBS’s “A Lively Experiment,” notes that aging baby boomers and seniors worry about issues facing the younger generations, personal debt resulting from student loans to national debt. On the other hand, “Younger folks worry about how they will take care of their parents and grandparents, as well as providing for their own retirement,” she says.

“In a state like Rhode Island, which has such a strong family centered culture, these issues weigh heavily on almost everyone’s minds,” observes Schiller.

One of the poll’s positive findings was that the respondents did not cite healthcare for seniors as a pressing issue even though they did express concern over Social Security and health care reform, adds Schiller. “Preserving Medicare is as important, if not more, to the physical and financial well-being of seniors, so I found it striking that it was not as large a concern [as other issues].”

The polls negative findings of a distrust of government, rather than just a disappointment, concerns Schiller, noting that “Democracies do not fare well when the people lose faith in their government.”

As indicated by the poll, Schiller believes that Rhode Island state elected officials are viewed more positively by voters than those serving in Congress. But, 2014 will be a challenging year for them, especially with issues like the 38 Studios debacle, pension reform issues, and Rhode Island job growth. Schiller believes that “If the General Assembly can increase the trend towards greater transparency and accountability, than they might be able to reverse the downward slide of public faith in government.”

As noted in the poll, “public opinion about Congress is at an all-time low,” says Darrell M. West, Ph.D., Vice President and Director of Governance Studies at the Brookings Institution. “People are disenchanted with the hyper-partisanship in Washington, D.C., and the inability of congressional leaders to address major policy problems, he says, noting that the government shutdown was very disturbing to mainstream and people now worry about Congress getting anything done.

West, a former Brown University professor and a prominent Rhode Island political commentator, does not see a major resurgence of bipartisanship in this Congress.
“The parties have incentives to highlight their differences rather than compromise their principles. That will make it difficult for the parties to work together, he says.

But West sees an indicator that the GOP might move away from its ties to the Tea Party that put a damper on reaching across the aisle to get the people’s work done. “The only promising sign is Speaker Boehner’s declaration of independence from the right-wing. A month ago, Boehner criticized outside conservative groups and said they had lost all credibility. If he really believes that, it may embolden him to work on immigration reform and pass needed legislation”, says West.

Because of the complexity of today’s domestic and foreign policy, the People want and need their elected officials to quit this partisan bickering and join together to solve the enormous problems that face the nation, warns well-know Rhode Island activist, Susan Sweet, a keen watcher of state, national, and global politics. “Without the political will to stand together and strengthen the People of America, this great experiment in democracy could decline and fall,” she says.

The AP-NORC national poll was conducted by The Associated Press-NORC Center for Public Affairs Research from Dec. 12-16, 2013, with 1,141 adults. Additional information about how the survey was conducted, including the survey report and the survey’s complete topline findings can be found on the AP-NORC Center’s website at http://www.apnorc.org.

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

Older Voters Talk Turkey to Congress

Printed October 26, 2012, Pawtucket Times 

            Even the Presidential election less than two weeks away, registered voters across the nation should exercise their Democratic right to vote.  Since the beginning of July local and state political candidates attended hundreds of public events scattered throughout the OceanState, passing out campaign literature, putting up signs throughout their legislative districts, along with distributing bumper stickers to promote their candidacy on their supporter’s vehicles. .

             During this current election cycle AARP moved to push Congress to address the major issues surrounding Social Security and Medicare, gathering opinions from millions of Americans in thousands of communities across the nation. 

            “People of all ages and across party lines believe Medicare and Social Security are critical to the health and retirement security of older Americans and yet all voters are hearing from the candidates about these programs are attack ads and 30-second sound bites,” says AARP Rhode Island State Director Kathleen S. Connell. “The next President and Congress could determine the future of Social Security and Medicare. Voters want and deserve to know where the candidates stand.”

Setting the Record Straight

            Last March, AARP, the nation’s largest aging advocacy group and its state groups, unrolled a new initiative to educate voters about the nation’s two largest domestic programs, Social Security and Medicare and to gather their thoughts to forward to decision makers inside the Washington Beltway.  

            Following its national headquarters’ lead, AARP Rhode Island geared up its final phase of its “You’ve Earned a Say,” initiative, an effort to gather grassroots feedback from “Outside the Beltway” to bring to Congressional lawmakers as they continue their heated debates as to how to bolster the solvency of the nation’s Social Security and Medicare programs.  The educational initiative was created to fuel conversations at the state and national levels to ensure that workers in every state, who have faithfully contributed into Medicare and Social Security Programs, had a direct say in the future reforms of these programs.

            AARP Rhode Island reached out to 130,000 Rhode Island members and its Washington, DC headquarters, to nearly 40 million members to raise awareness of the “You’ve Earned a Say” initiative.  It’s website, www.earnedasay.org, provided both factual and straightforward information as to policies that are being considered and enabled a person to share their ideas with Congress and those running against Congressional incumbents, as how to strengthen these programs. 

            So far, AARP’s educational initiative brought over 3 million people into this conversation on Medicare and Social Security and held over 3,000 events.  At the local level, AARP Rhode Island staff met over 4,000 aging baby boomers and seniors who shared their concerns about the future of these programs. 

            According to Connell, AARP’s “You’ve Earned a Say” initiative was created to bring balanced information to voters — both the pros and the cons — about the policy options being debated during the upcoming Presidential and Congressional elections for both programs. 

            Earlier in this summer, AARP released a series of national surveys on the opinions of voters ages 50 and over, which found that these voters overwhelmingly think the candidates have not done a good job of explaining their plans on Social Security (67%) and Medicare (63%). Voters 50-plus – across party lines – say that getting more information on the candidates’ plans on Social Security (72%) and Medicare (70%) will help them determine their vote on Election Day on Tuesday, November 6, 2012.

            Through the reports and ongoing You’ve Earned a Say events, AARP worked hard to elevate the voices of Rhode Island voters and provide them with nonpartisan information about candidates’ positions on issues important to aging baby boomers and seniors.  In August, AARP launched the “You’ve Earned a Say: Vote for Retirement Security” 2012 Voters’ Guides featuring information from presidential, senatorial and congressional candidates – in their own words – on their own specific plans to strengthen Social Security, Medicare and financial security.

            This week, AARP Rhode Island volunteers delivered a 10 page report entitled “Rhode Islanders Have Their Say about Medicare and Social Security” to Rhode Island Members of Congress and congressional candidates.  The state-specific report conveys the opinions of over 2,100 Rhode Islanders who have participated in the AARP initiative.  National and state-specific versions of the report were also delivered to both presidential and congressional candidates in every state, as well as sitting lawmakers, so they could hear directly from their constituents about their views of how to strengthen these vital domestic programs. 

A Rhode Island Snap Shot

            Out of  2,182 respondents, 32 percent believe Social Security is “okay as is,” followed by 26 percent who only saw a need for minor fixes.    Twenty three percent of those responding believed that Congress must make major changes to the program with 19 percent seeing this domestic program in “a state of crisis.”

            As to Medicare, 26 percent of the respondents say that Medicare “is ok as is” followed by 28 believing that only minor policy fixes are need to keep it solvent.  However, a whopping 31 percent believes major changes are needed to fix Medicare, followed by 15 percent saying Medicare is in “a state of crisis.”

            Twenty eight percent say that they expect the benefits from participating in Social Security and Medicare will equal the contributions they paid while 28 percent will get less benefits.  Forty four percent believe that they might get more back from these two programs the same that they contributed.

            Thirty six percent of the respondents say that more funding is needed to maintain the same benefits while 13 percent fear that benefits will be slashed.  Forty percent expect more funding is needed to shore up the program, but expecting a cut in benefits.  Twelve percent have no opinion.

            Finally, ninety one percent of the respondents want their voice heard by Washington policy makers but 47 percent do not expect it will make a difference.  Nine percent are not interested in getting involved.

            The majority of respondents (51 percent)  called for some changes to be made now, but suggested that Congress should wait before making major changes.  They (35 percent) also believed that higher paid workers aren’t paying enough into the Social Security program and that the program should become solvent before bettered benefit are paid out (68 percent).

            Additionally, the majority (70 percent) also called for a balanced approach when making revenue and benefit changes to ensure there is retirement benefits to future retirees. Fifty five percent also supported upper income workers get higher benefits because they contributed more into the system.

            Most of the respondents (48 percent) also suggested that Congress move slow in making major changes to Medicare, only making small fixes now.   Thirty six percent  believe that the biggest challenge facing Medicare is rising health care costs.  Seventy five percent agreed that all future retirees continue to get guaranteed coverage and care as those get now.  As with Social Security, a majority (62 percent) also called for a balanced approach when making revenue and benefit changes to ensure Medicare is available to future retirees.  Forty four percent say that premiums and funding from the genera federal revenues should not be used to cover increased health care costs.

            Voting may be more difficult in this heated partisan political campaign where voters must learn to separate political rhetoric and negative innuendoes from the substance of issues.  AARP’s “You’ve Earned a Say” initiative is a successful attempt to give back power to voters, helping them become more knowledgeable about Social Security and Medicare in order to rise above negative campaigning.  Your vote must be made by understanding the facts and not be influenced by the fiction of negative attack ads.

            Herb Weiss is a Pawtucket-based freelance writer who covers aging, health care and medical issues.  He can be reached at hweissri@aol.com.