The U.S. stock market may give us a rocky ride in 2016, but the year is shaping up to be a good one for retirement savers. At long last, investment advisers may be required to put your best interests ahead of their own.

The U.S. Department of Labor is applying the finishing touches to the so-called fiduciary rule that affects anyone with a 401(k) or Individual Retirement Account (IRA).

This rule will require banks, brokers, mutual fund companies and insurance agents to keep fees low and protect your savings from excessive risk when they advise you, rather than focus on how much they can earn in commissions.

If you doubt that we need this regulation, consider the case of JPMorgan Chase & Co. Just before the holidays, the largest bank in the United States agreed to pay $307 million to settle accusations by the U.S. Securities and Exchange Commission (SEC) that brokers and advisers in several JPMorgan divisions steered clients into its own, more expensive investment products over other choices without making the required disclosures to clients about conflicts of interest.

JPMorgan also gave preference to third-party hedge fund managers who paid placement fees equal to 1 percent of the market value of invested client assets — so-called “retrocession” fees. While clients did not pay those fees directly, this type of arrangement ultimately hurts the investor because it puts a drag on performance.

“We have always strived for full transparency in client communications, and in the last two years have further enhanced our disclosures in support of that goal,” the company said in a written statement.

But disclosure is only part of the problem.

If the Labor Department rules were already in place, they would have governed any dealings by the bank affecting client retirement accounts, including rollovers from 401(k)s into IRAs — already one of the largest and most lucrative segments of the investment industry and only getting larger as more baby boomers retire.

Meanwhile, the SEC has responsibility for monitoring fiduciary compliance outside retirement accounts. The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 directed the agency to consider ways to strengthen and broaden existing fiduciary standards under the securities law. The agency has not taken action yet.


Mark Miller is a Reuters columnist.