By Matthew Heimer
One of the wonkiest debates in retirement planning is arguably also one of the most important. It’s about whether financial advisers who sell IRAs should be required to follow the so-called fiduciary standard. A fiduciary is required to act in a client’s best financial interests; someone who doesn’t follow the standard can sell a client almost any investment product that’s “suitable”—even if it’s expensive, or if selling it earns the adviser a fat commission.
Opponents of the fiduciary standard say that it would generate red tape and liability issues that would make the system more expensive for consumers. And recently, that side of the debate got some valuable support, in the form of a third-party study that concluded that retirement-account clients whose advisers followed the fiduciary standard were already paying as much as 70% more than their peers. The report has had a lot of influence in Washington, D.C. policy circles. But as SmartMoney.com’s Ian Salisbury reports today, it includes some notable flaws in its methodology—and consumer advocates aren’t pleased.