Warren questions sales perks for retirement advisers

Sen. Elizabeth Warren (D-Mass.) is launching a new probe, asking some of the biggest investment firms in the country to justify rewarding retirement advisers with pricey perks for bringing in fees from retirees.

The lawmaker sent a list of questions to 15 of the largest annuity providers Tuesday, pressing them about a business arrangement where retirement advisors can reap “a vast range of perks” from high sales activity. Calling it a “clear conflict of interest,” Warren said the rewards encourage advisers to steer clients towards pricier investments, rather than focus solely on providing solid retirement investment advice.

{mosads}Among the perks available to advisers that reap hefty commissions are luxury cruises, car leases, iPads, and in one case, an “NFL Super Bowl Style ring” made of gold, rubies and diamonds.

“Annuity agents that are more interested in earning perks than in acting in their clients’ best interest can place Americans’ savings and retirement security at risk,” she wrote in one letter.

Warren’s letters mark the latest in an ongoing feud between Democrats and the financial industry, as the Obama administration is pushing tougher rules for retirement plan advisers.

After years of stops and starts, President Obama has thrown his weight fully behind a Labor Department effort to write rules requiring retirement investment advisers to act solely for the benefit of their clients. Advocates of the rule, including the president, argue that establishing a so-called “fiduciary duty” around retirement plans will ensure clients receive the best possible advice, rather than encouraged to invest in plans that earn high fees for the brokers.

But the financial industry has hotly contested the measure, warning that imposing this new requirement would simply drive away all sorts of investment advisers, leaving many Americans, particularly the less wealthy, unable to receive any retirement advice at all.

The Labor Department proposed a rule imposing the requirement earlier this month, and financial industry groups are already pushing for the rule to be delayed.

In her letters, Warren asked the companies to detail all rewards they offer employees that sell investment products.

At the same time as she sent out the letter, Warren highlighted several reward programs offered by annuity dealers that detail how much employees will need to sell to earn rewards like a car lease on a Mercedes-Benz or luxury trips.