After six years of effort, the Labor Department has finally issued new rules governing the behavior of financial advisers who handle retirement accounts. The rules require all financial professionals working on 401(k) or IRA accounts to act as fiduciaries, which means they are supposed to put their clients' interests first. They cannot, for example, recommend a mutual fund they know is worse for their clients because that fund pays them a higher commission for recommending it. Most Americans assume that this is already true, but it is not, and all you need to know about the financial services industry is that they have fought this tooth and nail for decades.
The consumer side of the financial services industry makes its money by mystification. Or, in technical terms, by exploiting the information gap between average investors and insiders. Most people know nothing about stocks and bonds and don't care to, and many of them are paralyzed by anxiety over having to manage their investments. What they want is for someone they think they can trust to handle all that for them, and they are willing to pay handsomely for that sense of safety. I don't see anything wrong with that as long as the adviser is trying hard to fulfill that obligation, but all too often this is not true. Every industry spokesman who has ever appeared in the press says that the "vast majority" of advisers really work for their clients, but if that is so, why did they fight the new rules so hard?.
The new rules do not protect anyone from stupid financial advisers, however, just nakedly crooked ones. But they will severely crimp the game by which insiders set up plausible-sounding mutual funds and then raised money by paying shady brokers high fees to sell them to unwitting clients. That has to count as progress.