Industry Fires Back Against White House Study
The Securities Industry and Financial Markets Association (SIFMA) commissioned National Economic Research Associates (NERA) Economic Consulting to review a recent White House study on retirement advice. The study, entitled “The Effects of Conflicted Investment Advice on Retirement Savings,” was published in February 2015. The White House concluded that “Investment losses due to conflicted advice result from the incentives conflicted payments generate for financial advisers to steer savers into products or investment strategies that provide larger payments to the adviser but are not necessarily the best choice for the saver.”
As a result of the study’s findings, President Obama proposed new rules on retirement advisers. But the industry is pushing back against the study and proposed rules. The White House claims that faulty advice cost American retirees $17 billion. NERA’s review retorts, “While the Report points to academic literature to support these aggregate cost estimates, the estimates are not directly found in the academic literature. Instead, the aggregate costs are calculated by the authors of the Report themselves, who make generalizations and extrapolations which they often do not fully support.” SIFMA’s actions are notable, as it is unusual for the industry to push back so publicly and quickly against Administration actions.
- SIFMA Press Release: http://www.sifma.org/newsroom/2015/sifma_releases_study_in_response_to_white_house_report_on_dol_retirement_regulation/
- NERA Study: http://www.nera.com/content/dam/nera/publications/2015/PUB_WH_Report_Conflicted_Advice_Retirement_Savings_0315.pdf
- White House Study: https://www.whitehouse.gov/sites/default/files/docs/cea_coi_report_final.pdf