The argument against applying fiduciary rules to retirement account advisors revolved around making sure the middle class had access to professional advice. But how big are these accounts, really?
The insurance-oriented advisory group LIMRA warns that 40% of the working population that makes under $40,000 a year does not contribute enough to its retirement to get their full 401(k) match.
Figuring a rough 3% match, these people are contributing at most $1,200 a year to their accounts.
That's a sad thing. The retirement dreams of the American people are looking dim almost across the board, and we all need all the help we can get.
But if half the people out there make under $27,000 a year, it looks like that 40% of the population is a lot more widespread than people who work primarily with affluent clients might think.
Whether the advisor charges these people through commissions or management fees, the added revenue on that $1,200 in new flows is going to be either negligible to the advisor, prohibitively expensive to the account, or both.
So LIMRA's resistance to establishing a fiduciary code for retirement accounts may not be about the lost income -- at least at the accumulation phase.
Maybe the group wants to preserve commissions for the distribution side, when retirement accounts have grown as big as they're ever going to get?
It might be obvious to you, but otherwise the math just doesn't make any sense.