(Reuters) - U.S. brokers and financial advisers would face new constraints under a plan President Barack Obama put forward on Monday to reduce conflicts of interest and "hidden fees" that cost Americans billions of dollars in retirement savings every year.
In proposing the rules, Obama said he sought to protect Americans from being steered into costly retirement investments that produced high commissions for brokers but low returns for investors preparing for retirement.
Democrats and Republicans are trying to position themselves as champions of the middle class in the run-up to the November 2016 presidential election. Retired seniors are an important voting bloc.
The proposed rules, which the Department of Labor is expected to submit formally in the coming months, will inject political pressure into an already intense debate over brokers' obligations.
They would have an impact on thousands of brokerages, from large players such as Fidelity, Wells Fargo (WFC.N), Charles Schwab (SCHW.N) and Raymond James (RJF.N), to smaller, independent shops.
Brokers would be held to a higher "fiduciary standard," requiring them to put their clients' financial interests ahead of their own.
The White House said the proposals target fees and payments that on average lead to a full percentage point lower annual return on retirement savings at a cost to Americans of $17 billion a year.
In particular, Obama called for new rules preventing retirement brokers from steering clients' savings into funds with higher fees and lower returns, or advising clients to roll their funds over into higher-cost plans.
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