NEW YORK (TheStreet) -- A proposed rule change by the U.S. Department of Labor could cut Americans' retirement savings by up to $32 billion, according to an industry-funded study.
The regulation would affect employees who cash out of their retirement accounts when they leave their jobs, keeping them from getting financial advice from investment professionals that work for firms selling retirement products such as individual retirement accounts.
In public comments, the DOL has said it's a "conflict" for investment professionals working at firms selling retirement products to work with employees looking for retirement distribution advice and that those that conflicts lead to "underperformance."
A study from Quantria Strategies says the rule would slash total U.S. retirement savings by between 20% and 40%, or in dollar terms, between $20 billion and $32 billion out of those retirement accounts."Our position is the investment industry is always acting in the best interests of clients, and we believe employees leaving their jobs would be hurt without professional advice," says Kent Mason, a spokesman for Davis & Harmon, which commissioned the study on behalf of investment industry firms. The Department of Labor tried to install the "no advice" rule in 2010, but was stopped by rare bipartisan opposition in Congress. The rule has been "re-proposed," as Mason says, and is now moving toward implementation.