Kenneth Rogers on Marketwatch posted an article entitled Make your voice heard on new conflicts rule about a proposed ruling by the Department of Labor that would change the advice financial advisors are allowed to give their clients on products like 401Ks and IRAs. Today, these advisors or brokers are held to what is known as the suitability standard. This means that brokers have to recommend products that are "suitable" for their clients, but not necessarily in their best interests. Brokers can use this lax standard to recommend investments that generate high fees and commissions for themselves. If you've ever seen the PBS documentary the Retirement Gamble (I highly recommend you watch this if you haven't already) then you'd know this happens in spades, to the detriment of the investor, who winds up paying high fees. High fees can eat up a significant percentage of a portfolio over time, putting money into your advisor's pocket at your own expense.
The White House Council of Economic Advisors analysis estimated that conflict of interest resulting from the current situation costs investors about 1% annually, or $17 billion per year.
The new ruling would change the standard so that brokers need to match their clients with products that are in the client's best interest. Countries like the UK and Australia have gone a step further, banning brokers from earning commissions at all. While not as draconian, the proposed rules are expected to significantly cut down on unecessary fees paid by investors.
You can help make this proposed ruling happen. The Department of Labor is open to public comment and is looking for feedback on the ruling before making a final decision. You can view the proposed ruling and make comments here.