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Biden’s Proposal Aims to Eliminate ‘Junk Fees’ in Retirement Advising


Retirement planning is a critical financial endeavor, and the decisions made during this phase of life can have long-lasting consequences. President Joe Biden’s administration is taking steps to improve retirement advising and protect the interests of retirees. One significant aspect of this effort is to target and eliminate what’s often referred to as ‘junk fees’ in the retirement advising industry. In this article, we will explore President Biden’s proposal and its potential impact on retirement advisors and their clients.

The Landscape of Retirement Advising

Retirement advisors play a vital role in helping individuals plan for their financial futures. They offer guidance on saving, investing, and managing assets to ensure a comfortable and secure retirement. However, the retirement advising industry has been criticized for the presence of ‘junk fees’ that can eat into retirees’ savings and investment returns.

What Are ‘Junk Fees’?

Junk fees refer to various hidden or excessive charges that retirement advisors may impose on their clients. These fees can erode the returns on retirement investments and leave individuals with less money for their golden years. Some common examples of junk fees include:

Excessive Management Fees: Some advisors charge exorbitant fees for managing retirement accounts, which can significantly reduce the overall returns for retirees.

12b-1 Fees: These fees are typically associated with mutual funds and are used to compensate brokers for selling the funds. They can result in unnecessary costs for retirees.

Administrative Fees: Administrative fees are charged for various services, such as record-keeping and processing transactions. While some fees are reasonable, others can be excessive and eat into retirement savings.

Hidden Commissions: Advisors may receive hidden commissions for recommending specific investment products or strategies, potentially leading to conflicts of interest.

President Biden’s Proposal

To address the issue of junk fees in the retirement advising industry, President Biden’s proposal includes several key measures:

Enhanced Fiduciary Standard: The proposal aims to strengthen the fiduciary standard for retirement advisors. This standard requires advisors to act in their clients’ best interests, prioritizing the financial well-being of retirees over their own profits.

Transparency and Disclosure: The proposal encourages greater transparency in fee disclosure. Retirement advisors would be required to clearly communicate all fees and potential conflicts of interest to their clients, ensuring that retirees have a full understanding of the costs associated with their advisory services.

Elimination of Conflicted Advice: The proposal seeks to eliminate situations where retirement advisors may provide conflicted advice that benefits them at the expense of their clients. This includes eliminating 12b-1 fees and hidden commissions.

Fair Compensation: The proposal aims to ensure that retirement advisors are fairly compensated for their services. It seeks to strike a balance between providing quality advice and avoiding excessive fees that can harm retirees’ financial well-being.

Potential Impact

President Biden’s proposal could have several implications for the retirement advising industry and its clients:

Increased Protection: Retirees can expect increased protection through a higher fiduciary standard that places their interests at the forefront of retirement advising relationships.

Reduced Costs: Greater transparency and the elimination of junk fees can potentially lead to reduced costs for retirees, allowing them to keep more of their retirement savings.

Improved Access to Quality Advice: The proposal encourages retirement advisors to provide high-quality advice that aligns with the best interests of their clients. This may lead to a more professional and ethical industry.

Streamlined Retirement Planning: Clearer fee disclosure and a focus on eliminating conflicted advice can streamline the retirement planning process, making it more efficient and less convoluted for retirees.

Addressing Retirement Insecurity: By reducing excessive fees and conflicts of interest, the proposal seeks to address the retirement insecurity that many Americans face by ensuring that their retirement savings are not needlessly eroded.


President Biden’s proposal to target ‘junk fees’ in the retirement advising industry represents a significant step toward improving the retirement planning landscape. While the proposal may face legislative and industry challenges, its intent is clear: to protect the financial interests of retirees and provide them with transparent, fair, and quality retirement advising services. The potential benefits of this proposal are not limited to retirees alone; they extend to the industry, financial advisors, and the broader American population concerned about their financial well-being during retirement.