Donald Trump signed an executive order in the Oval Office this month calling for review of the Obama administration’s landmark retirement savings “fiduciary” rule.  Shortly after, a fellow I worked with a number of years ago, who follows my column, emailed me this story: 

“Back in the early ‘80s, my wife and I were teachers in the city. I worked at a private school serving troubled children on the Upper East Side; she worked in an elementary school on 96th Street and West End. We had three great kids and lived in a large, rent-controlled apartment near Yankee Stadium in the Bronx. Together we brought home about $600 a week. We lived paycheck to paycheck, pinched nickels and dimes, and during vacation time, drove to Florida every winter and camped in the Adirondacks during the summer.  

I conscientiously balanced the checkbook every month, cross-checked all the charge slips, and haggled with merchants whenever I thought I could get a better deal. We worried when we had unexpected expenses, drove used cars I bought from my next-door neighbor and stocked up on supplies that went on sale, even when my better-half didn’t really like the brand I chose. 

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My mother, and then soon after, my father, passed away when I was still relatively young, so I came into some extra money. Not wanting to squander the dough, and being concerned about retiring someday, I asked a few colleagues how they managed their money. One fellow turned me on to a financial advisor at Prudential Securities, with an impressive office on Fordham Road. He quickly convinced me that he could be of help, talked to me about retirement accounts, like IRAs, 401(b)s and 401(k)s, had me sign some papers opening a brokerage account, and told me he would be in touch. He also told me that he was going to charge 2 percent of the money he managed; I found this acceptable since I knew little to nothing about investing and wanted to rely on him.  

Over the next couple of years, I heard from my adviser about once a month. He pushed “great deal” after “great deal” my way, and I watched as each one slowly turned sour. A nest egg of nearly $20,000 dwindled to almost nothing, even though, at the time, the stock market was doing well. What I should have known, but the adviser wasn’t required to tell me, was that he also got a bonus for selling me the securities his firm was pushing. Looking back, the securities he recommended were of dubious value, but made him even more money. I lost a bundle, but learned a valuable lesson: I should have chosen my broker more carefully, someone who would have put my best interests first.

Few of us know that most financial advisers are paid referral fees and bonuses for directing client money into selected stocks, securities and funds.  Slated to go into effect in April, the Obama administration’s fiduciary rule would have made it much harder for financial advisers to give inaccurate, untrue and misleading advice, and required them to legally consider their clients’ interests above their own. 

Currently, brokers, financial advisers and other finance professionals not registered as investment advisers with the Securities and Exchange Commission are not legally bound to act in their clients’ best interest.  They just have to show that the investment is suitable, but not necessarily the best option for their client.  

Ill-advised financial advice costs retirement savers about $17 billion a year, according to a 2015 government report. Under Obama’s fiduciary rule, financial advisers would still be able to receive commissions, but they must provide a contract promising to put a client’s interests first and receive no more than reasonable compensation. Brokerage firms would also have to disclose all their compensation and incentive arrangements.

Making it more difficult for financial services firms to profit at their clients’ expense should be a no-brainer. So, why annul the fiduciary rule?  Well, look where it’s coming from. This toxic directive from Trump is just another clear reminder that he is the most dangerous creature of that swamp he promised to drain.  And, if Social Security goes private, look out!