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 The change would mandate that brokers follow a "fiduciary
standard" to prioritize clients' interests over brokers' interests,
they said. The proposal is opposed by many Republicans and financial
firms, which are fearful that the plan will limit broker
compensation.
The move would cut back on "hidden fees" that financial advisers can
pocket when steering clients into more expensive products that may
not be the best option for the investor, officials said. Such
practices cost working- and middle-class families $17 billion a
year, according to the White House.
“The president will call on the Department of Labor to establish
updated rules of the road to make sure that responsible Americans
who are saving for retirement are getting a fair share of returns on
their savings,” Jeff Zients, Obama's top economic adviser, said in a
conference call with reporters on Sunday.
The push for tighter rules fits into Obama's message of championing
the middle class, a theme that is likely to dominate the 2016
presidential campaign. Obama will unveil his proposal during remarks
hosted by the Association of American Retired Persons (AARP), which,
along with labor and consumer advocacy groups, has lobbied for the
rule change.
 Seniors are an important voting bloc for both parties.
Massachusetts Senator Elizabeth Warren, a consumer advocate who some
Democrats hope will challenge former Secretary of State Hillary
Clinton for the party's presidential nomination, is expected to
attend.
The industry fears a rule change would curb compensation for brokers
and would limit the types of investment products investors can get.
Fierce lobbying by the industry forced the Labor Department to scrap
its original proposal a few years ago.
"This re-proposal could make it harder to save for retirement by
cutting access to affordable advice and limiting options for
savers," said Ken Bentsen, president of the Securities Industry and
Financial Markets Association, which represents banks and assets
managers.
Daniel Gallagher, a Republican member of the Securities and Exchange
Commission, chided the White House last week for circulating
baseless "propaganda" to rally support for the change.
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The Labor Department has been working for several years to overhaul
its rules governing how advisers provide advice to clients in
workplace retirement plans such as 401(k)s and individual retirement
accounts.
The department wants to hold these advisers to the high "fiduciary"
standard that would put clients' interests first. Currently, many
advisers on Wall Street are only required to suggest products that
are "suitable" to investors.
A first draft of the plan generated stiff opposition from Wall
Street and prompted the U.S. House of Representatives to pass bills
trying to delay or kill the rule-making.
The department was forced to scrap the draft and come up with a new
one.
Secretary of Labor Tom Perez said the proposal would be published in
the coming months and be open to a comment period. He said feedback
from the previous failed attempt at reform had informed the process.
"We expect that the proposed rule will not ban commissions or any
common compensation practices, and it will allow financial advisers
to continue providing general education on retirement savings," he
said, citing some of the differences with the previous proposal.
(Reporting by Jeff Mason and Sarah N. Lynch; Editing by Mohammad
Zargham)
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