Obama’s New Rules for Financial Advisors a Boost to Small Business

Who advises you about your retirement account? And more importantly how is he or she being compensated and by whom?

On Monday, while representing Main Street Alliance, I found myself in the same room with President Obama and the Secretary of Labor Thomas Perez, as they unveiled some new rules that coming for those who sell retirement investment plans such as annuities, IRAs and 401ks.

We see the ads for financial advisors everywhere telling us to follow the brightly colored path, the tumbling blocks or the whales into financial security in retirement.

When you finally choose one, you could be getting sound advice and dealing with reputable brokers who put your interest first. However, it’s just as possible that your retirement financial advisor might not be working in your best interest – and it could cost you. High sales commissions, luxury perks and other incentives from high load, low yield funds to brokers – along with the cost of those big ad budgets, could be coming out of your pocket in the form of high percentage management charges and hidden fees.

My grandfather was a rail executive and it just so happens I traveled by train from Newark, New Jersey to Washington, D.C. on Monday. Standing on the dingy platform at Newark’s Penn Station, I realized it was all brand new when my grandfather’s star was rising at American Locomotive.

It had been an efficient modern system of mass transportation 100 years ago. Today, the station, tracks, even the train I rode on, are relics of the steam age. Like this country’s decrepit rail system the rules governing retirement investment brokers are decades late and billions short.

According to an analysis done by the White House Council of Economic Advisors, because of conflicts of interest, IRA investors lose between $8 billion and $17 billion in underperformance every year nationwide.

According to Secretary Perez, retirement advisers, who we trust to provide critical financial advice every day, are not obligated to look out for our best interests.

“As a result, they can steer you toward high-cost, low-return investments instead of recommending quality ones, because it means back-door payments for them … it could cost you tens of thousands of dollars over your lifetime,” said Perez.

Under the President’s direction, the Labor Department will publish a rule in the coming weeks that will require retirement advisers to put the best interests of their clients above their own financial interests.

As a small businessman I am all for this proposal. I don’t have a big firm with our own in-house financial management team that can advise me on this. I want the financial advisors I work with to be required to represent my interests.

But the brokerage industry and the U.S. Chamber of Commerce are holding true to their mission of making it as easy as possible for the financial industry to syphon money out of the economy with a minimum of effort rather than to invest in and build America.

They are making arguments against the President’s proposal that are as old and run down as that train platform in Newark – they say small accounts will suffer, that they are already heavily regulated and that the market will take care of things. Don’t buy it.

As the Department of Labor has made clear, the brokerage firms will still get their commissions, they will just have to earn them on your behalf. Commercial IRA’s will still be available if you are determined to spend a lot of money on fees.

Let’s adopt this rule. Small investors will still be able to get what they need, but they also will be more confident that what they are being offered is in their best interest. You can read all the details on the White House Blog.

Clean Fuels Standard Strengthens Local Economies

Alliance Senior Policy Associate: "By sending billions out of state, we doom our economy to be more susceptible to falling apart at the seams when Wall Street has an off day"

Ben Henry, Alliance Senior Policy Associate: “By sending billions out of state, we doom our economy to be more susceptible to falling apart at the seams when Wall Street has an off day.”

Last night I teamed up with Washington Community Action Network Political Director Mauricio Ayon to testify at a Washington Department of Ecology hearing on the proposed Clean Fuels Standard, which would establish a requirement that oil refineries and distributors cut carbon pollution from gasoline and diesel by 10 percent over 10 years.

Needless to say, there are big economic benefits in adopting these standards, which incentivizes the development of a variety of clean fuels and technology solutions, like advanced biofuels, electricity, natural gas and propane. Read more

The Road to Prosperity

Road to Prosperity coverGiving Idaho Immigrants the Chance to Apply for a Driver’s License Cultivates a Future of Shared Opportunity and Success to the Benefit of All Idahoans

Read: The Road to Prosperity

This report was produced by Julie Chinitz, Ben Henry, Fernando Mejia and Sheley Secrest of the Alliance for a Just Society, and Krista Bustamante, Ana Martinez and Ruby Mendez of Idaho Community Action Network.

http://allianceforajustsociety.org/wp-content/uploads/2015/02/2015.02_The.Road_.to_.Prosperity-report-Idaho.pdf

Alliance Statement on Immigration Ruling

FOR IMMEDIATE RELEASE:   Tuesday, February 17, 2015

Contact:  Kathy Mulady, Communications

kathy@allianceforajustsociety.org

Alliance for a Just Society Joins Organizations Nationwide, Confident That

the Politically Motivated, Anti-immigrant Ruling Will be Quickly Overturned

WASHINGTON – The ruling today by an anti-Obama, anti-immigrant judge in Brownsville, Texas, is disappointing, but it is only a temporary setback. Immigrants and immigrant advocates have fought long and hard, and will not give up now.

U.S. District Judge Andrew Hanen issued a preliminary injunction that temporarily blocks the start of the new immigrant deferred action programs, and pushes back the Feb. 18 start date for young immigrants to apply for work permits.

“We are deeply disappointed that legislators, and even a judge, continue to play political games with people’s lives. It’s inexcusable, but at this point, no longer surprising,” said LeeAnn Hall, executive director of the Alliance for a Just Society.

“This is one more bump in the road as we build a sturdy path and permanent solution that includes citizenship for all 11 million immigrants in our country. We are so close, we must continue our march,” said Hall.

Legal experts throughout the country agree that President Obama’s executive action on immigration is well within his authority. We are confident that the legal system will overturn the money-wasting and time-wasting lawsuit.

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Alliance for a Just Society is a national research, policy and organizing network focusing on economic, health and social justice issues.

In Seattle Feb. 26? Attend our Panel on Health Care Disparities

Join us on February 26!

What Will it Take to End Racial Disparities in Health Care in Washington State?

Panel Discussion in Seattle’s Columbia City on Feb. 26

Insurance coverage alone can’t overcome the histories of neglect, poverty and discrimination that created poor health outcomes for people of color in Washington. Improved access to health care and environmental intervention – especially for low-income families – are critical.

The Affordable Care Act includes initiatives to fight racial and cultural disparities in health care, it’s up to Washington to put them to use.

Lead paint, cockroach infestations, mold, pesticides and a many other environmental contaminants have been linked to illness. Many environmental causes of illness can be addressed under Medicaid. Details are available in this new report.

Join us for a discussion of the problems, and recommendations on how we can assure that everyone in our state has access to fair and equitable health care, and to healthy lives.

Panelists:

                   Moderator: Jill Reese, Associate Director, Alliance for a Just Society.

 

When: Thursday, February 26, 2015

Time: 9:30 a.m. to noon

Where: The Commons, 3518 South Edmunds Street, Seattle WA 98118 (Columbia City neighborhood – take the Link light rail!)

Audience participation will be encouraged.

For more information: Bill Daley, Alliance for a Just Societybill@allianceforajustsociety.org

Or call (206) 568-5400

Alliance for a Just Society has produced pivotal reports for 20 years on state and national health issues including Medicaid, prescription drugs, and insurance industry practices.

Working Families Need Good Jobs – Not Just Any Job

Today, the Bureau of Labor Statistics released its January jobs report, showing that 257,000 jobs were added last month. Increasing jobs is great news, but only if those jobs allow workers and their families to make ends meet.

The numbers have been praised, especially the average hourly wages that “soared 12 cents” to $24.75. While wages did increase in January, that “soaring” was compared to a decrease in wages in December, and was only 7 cents higher than wages reported in November. Additionally, 20 states increased their minimum wage in January, which would on its own increase average hourly wages.

In the latest installment of the Job Gap Economic Prosperity Series, “Low Wage Nation,” we show that most of the country’s job growth is in low wage jobs paying less than $15 per hour. Occupations like retail sales and food service top the list of jobs with the most new openings, yet these occupations have some of the lowest wages in the country.

Such jobs do not pay enough for a single adult to make ends meet, let alone a parent with children. Additionally, women and people of color are also overrepresented in these low-wage occupations, leaving them less likely to earn enough to provide for themselves and their families.

Nearly half of all new job openings are low wage, and nationally there are seven job seekers for every job opening that pays at least $15 per hour. That means that six of those seven job seekers must either take a lower-paying job, or go without work, as there aren’t enough jobs of any wage level for all of the nation’s job seekers.

“There are still too many people out of work, and too few living wage jobs to go around. We need to invest in good paying jobs and celebrate once our workers are able to make ends meet,” said LeeAnn Hall, executive director of the Alliance.

Increasing the minimum wage does help increase workers’ wages across the board – we saw some of that in January’s job growth, and we can see more if more cities and states increase their minimum wage.

However, we also need to increase the number of jobs available that actually pay a living wage by investing in good paying jobs, like those in the health care industry. Once our workers are able to make ends meet, it will truly be cause for celebration.

A Question for Lawmakers Who Backtrack on Expanded Health Coverage: Seriously?

With two weeks left in the second enrollment period for Affordable Care Act health coverage, marketplace enrollment is projected to reach between 9 million and 9.9 million people this year. That’s a net increase of between 2 and 3 million people gaining coverage through the marketplaces. Millions more will gain coverage through Medicaid expansion.

That’s something to celebrate – but the celebration could be short-lived for many people. Instead of figuring out how to get more people health coverage in 2015, many newly-elected and re-elected state legislators and governors are actually plotting how to take health care away from people who just received it for the first time.

It’s a real threat to people who’ve just gained coverage through Medicaid expansion – especially in states where incoming lawmakers are openly hostile to anything related to the Affordable Care Act. Those at greatest risk of losing coverage are women and people of color.

In Arkansas, where 211,000 people recently gained coverage, the state legislature must reapprove the Medicaid expansion plan by a three-quarters majority again in 2015. The incoming Republican governor is unenthusiastic about the plan – and expansion opponents won seats in the legislature. That doesn’t bode well.

In Ohio, where more than 400,000 people have coverage under Medicaid, the state legislature is also required to reauthorize the program in 2015. And in New Hampshire, where more than 20,000 people enrolled in just three months, the new Republican majority in the NH House of Representatives will also take a fresh vote on the program as well.

The continuing failure of more than 20 states to adopt any expansion plans at all, and the prospect of newly elected legislators revoking expanded coverage for hundreds of thousands of residents, represents a serious health threat to women.

A recent 50-state report card on women’s health by the Alliance for a Just Society clearly shows that most of the states that rejected Medicaid expansion have poor or failing records on women’s health. When it comes to ensuring that women have access to health care, the majority of legislators in these states have turned their backs on women.

The 2014 Women’s Health Report Card ranks and grades every state in the country on 30 distinct measures of women’s health. The results: 17 of the 21 states that rejected Medicaid expansion received final grades of C, D or F – and 13 of those states received a D or F.

Politicians in these states are failing women, but they are especially failing women of color who are more likely to be working low paying jobs, not covered by health insurance, and are least likely to have access to medical care.

The number of black women without health insurance is at least 20 percent higher than for women overall in 17 states. The uninsured rate for Latina women is at least 50 percent higher in 44 states. Black, Latina, and Native American women without access to health care have dramatically higher rates of hypertension, diabetes and infant mortality than other women.

While it’s encouraging news that Wyoming, Montana, and even Idaho seem to be moving toward Medicaid expansion, it will also leave our nation with a disturbing illustration of how alive and well racial segregation is in America. Take a look at the map of states that are refusing coverage to their most vulnerable residents: being denied access to health care is the latest Jim Crow.

Lawmakers in states that haven’t expanded Medicaid yet should move quickly to adopt expansion plans this year. If they don’t, they will bear the responsibility for their states falling even further behind on women’s health, and worsening racial disparities in our health care system.

As for lawmakers considering a vote to take health care away from thousands of their constituents, all I can ask is: Seriously? Do you really want to do that?

It’s one thing to stand in the way of people gaining access to quality, affordable health care. But it’s something else when people have just experienced quality, affordable health care for the first time, and then you snatch it away from them.

I can’t imagine that many will take kindly to it. And just in case anybody’s forgotten, there’s another election just a couple years away.

LeeAnn Hall is the executive director of the Alliance for a Just Society, a national policy, research and organizing network focused on racial and economic justice. The Alliance has produced pivotal reports on state and national health issues including Medicaid, prescription drugs, and insurance industry practices for 20 years.