CalPERS to Dept. of Labor: Extend Fiduciary Standard to Retirement Advisers

CalPERS this week weighed in on a proposal that would increase the transparency and accountability of individual retirement advisors.

The pension fund roundly endorsed the proposal – which would give individual retirement advisors a fiduciary duty to their clients – in an open letter this week to the U.S. Department of Labor.

From Chief Investment Officer:

“CalPERS believes that fiduciaries should be accountable for their actions, and must transparently perform their duties to the highest ethical standards,” Ann Boynton, CalPERS’ deputy executive director of benefits policy, wrote to the federal labor department.

“The proposed rule appears to align with CalPERS’ beliefs on fiduciary responsibility and we support the department’s efforts to ‘safeguard plan participants by imposing trust law standards of care and undivided loyalty on plan fiduciaries,’” Boynton continued, quoting language from the proposed legislation.

The pension official highlighted the more than 40 million American families with assets in individual retirement accounts—their aggregate balance totaling upwards of $7 trillion. This population, she said, continue to be vulnerable to self-serving investment advice as long as the industry does not have to disclose any conflicts of interest.

Failure to implement the rule, according to CalPERS, could cost individual investors up to $1 trillion in retirement savings over the next 20 years.

Read more about the proposal here.

Photo by  rocor via Flickr CC License