Retirement Investments: Prioritizing Financial Returns Over Other Goals
This act aims to ensure that financial advisors and retirement fund managers make investment decisions based solely on potential financial returns and risk. This means that other factors, such as social or environmental goals, can only be considered at the explicit request of the client or under specific conditions in retirement plans, to avoid reducing future benefits. The goal is to protect your retirement savings by focusing on their growth.
Key points
Financial advisors must choose investments expected to yield the highest financial return, unless a client specifically requests other factors be considered.
Retirement fund managers must invest participants' money based only on financial factors (profit and risk) to protect future benefits.
Investments promoting social or environmental goals can be offered in retirement plans, but not as default options, and only if they do not reduce returns or increase risk for participants.
The act prohibits a new rule that might have allowed non-financial factors to be considered in retirement fund investment decisions.
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