Washington, D.C. – Many financial firms that claim to support a best interest standard for retirement investment advice compensate their “financial advisors” in ways that conflict with that goal, according to a fact sheet released today by the Consumer Federation of America (CFA). The fact sheet provides a brief overview of common financial firm compensation practices that encourage financial advisors to steer customers into higher cost, higher risk investments.

“When you look beneath the surface of financial firms’ opposition to the Department of Labor’s conflict of interest rule, it quickly becomes apparent that one of their primary objections is to provisions in the rule that would require them to limit or abandon common practices that encourage and reward harmful advice,” said CFA Director of Investor Protection Barbara Roper. “In other words, they give lip service to supporting a best interest standard while opposing the reforms needed to make that standard more than an empty promise.”

With members of Congress working on finalizing an end-of-year spending bill, financial firms and their lobbyists are seeking a policy rider that would delay, defund, or fatally weaken the DOL rule.  “Incentives matter,” said CFA Financial Services Counsel Micah Hauptman. “Financial firms are seeking to kill the rule in order to preserve their toxic and perverse compensation practices, and members of Congress should recognize who that harms—their constituents who are saving for retirement. We urge members to consider whose interests they’re serving as they consider whether to support a policy rider that undermines the DOL’s conflict of interest rule.”

A copy of the fact sheet is available here.

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The Consumer Federation of America is a national organization of more than 250 nonprofit consumer groups that was founded in 1968 to advance the consumer interest through research, advocacy, and education.