President Donald Trump’s recent order to review and perhaps trash a legal provision that safeguards retirement investments undermines the financial security of middle-class Americans, according to the senior advocacy organization AARP.

“It is time that all Americans can count on retirement investment advice that is in their best interest, not the interest of Wall Street,” said Nancy LeaMond, executive vice president of AARP’s national operations, in a statement issued after Trump ordered an official review and possible repeal of the Fiduciary Duty Rule. “Unfortunately, for many Americans, [the] executive order means they will continue to get conflicted financial advice that costs more and reduces what they are able to save for retirement.”

The rule, drafted under former President Barack Obama’s administration and scheduled to take effect in April, requires investment advisers who handle retirement accounts to act in the best financial interests of their clients. It limits their ability to collect hidden commissions and kickbacks for purchasing retirement investments and requires them to disclose directly to their clients any such payments they do receive. It also opens the door for clients to participate in class action suits brought against advisers who do not prioritize their financial interests.

“We started working on this issue five years ago,” said Lori Parham, state director of AARP in Maine. “The existing rules were legal but not ethical. We see [the new rule] as very much a step in the right direction, especially given the growing number of people who are trying to save for their retirement.”

Inappropriate investments that charge high transaction fees and hidden commissions cost retirement investors an estimated $17 billion each year, Parham said.

In an official White House memorandum signed late last week, Trump said the Fiduciary Duty Rule “may significantly alter the manner in which Americans can receive financial advice, and may not be consistent with the policies of my Administration.”

The memo, directed to the secretary of labor, calls for a review of the rule and the drafting of “a proposed rule rescinding or revising” it as needed.

As written, the approximately 1,000-page rule would do away with potential conflicts of interest in the management of retirement accounts, including Individual Retirement Accounts, 401(K) portfolios, annuities and pensions, by requiring investment brokers and advisers to act in a fiduciary capacity. That means making decisions solely in the financial best interest of their clients rather than to their own benefit.

“State security regulators have been saying for years that all advisers should have a fiduciary duty to their clients,” said Judy Shaw, securities administrator for the Maine Department of Professional and Financial Regulation, which monitors investment advisers and brokerages for compliance with state and federal regulations.

Instead, she said, most advisers currently are charged only with meeting a “suitability” standard in building their clients’ portfolios, based on basic information about goals and performance expectations.

“But what is suitable for a 30-year-old may not be suitable for a 60-year-old preparing for retirement,” Shaw said, explaining why the Obama administration felt it was essential to build in additional protections for retirement accounts.

Trump’s anti-regulatory challenge to the fiduciary rule is not unexpected. Although the document was drafted and fine-tuned with considerable input from Wall Street, the insurance industry and other financial groups, it has been criticized by the business sector from the beginning, including legal challenge filed by the U.S. Chamber of Commerce other groups and ongoing criticism from Republican lawmakers.

Arguments against the provisions of the fiduciary rule have included the possibility that it would limit the range of products investors could add to their retirement portfolios and that smaller investors would end up being charged more for investment advice in order to offset the loss of commissions.

In Bangor, Jim Bradley of Penobscot Financial Advisors said the fiduciary rule evolved as a reflection of growing consumer awareness.

“People have been becoming more informed generally about the investment industry, and that has introduced the whole ‘fiduciary’ language into the vocabulary of investors,” he said.

His agency, which has offices in Bangor and Portland, has been moving away from commission-based transactions and into fee-based services over the past five years, he said, well ahead of the finalization of the rule.

Bradley said many other agencies have taken the same tack, moving independently toward the fiduciary standard before the top-down language of the new rule took effect. A delay in the rule’s implementation, or even its repeal, is unlikely to reverse the trend toward more consumer-friendly policies, he said.

“Anything that makes it easier and safer for investors to utilize the services of a financial adviser will, in the end, be good for our industry,” he said.

There are about 78 independent agencies such as Penobscot Financial Advisors doing business in Maine, in addition to a handful of larger broker-dealers and large, national organizations such as Wells Fargo, Morgan Stanley and Merrill Lynch. Many Maine banks also offer investment opportunities for retirement. All would be affected by the implementation of the fiduciary rule, or by its delay.

Regardless of whether the rule survives the Trump review, Judy Shaw at the securities office said it will be up to regulators to ensure that investment advisers do not practice in ways that are “damaging, harmful or dismissive of investor interests.”

And, she said, investors large and small should learn more about how their money is invested, including how their advisers are paid.

Meg Haskell

Meg Haskell is a curious second-career journalist with two grown sons, a background in health care and a penchant for new experiences. She lives in Stockton Springs. Email her at mhaskell@bangordailynews.com.