Elizabeth Warren Exposes How Financial Advisers Exploit Retirees

It's legal for them to choose free vacations over their clients' interests.

—By Hannah Levintova

Retirees across America look to financial advisers for help in navigating options for smart retirement saving. But there's a scary fact many folks don't know when they entrust their life savings to a broker. According to a report released by Sen. Elizabeth Warren (D-Mass.) last week, many financial advisers promote inferior financial products to collect kickbacks—from pricey Caribbean vacations to gift cards and golf outings—offered by the companies that sell certain annuities. And what's worse, that practice is totally legal.

The study, called "Villas, Castles, and Vacations: How Perks and Giveaways Create Conflicts of Interest in the Annuity Industry," points out that loopholes in various rules from the Securities and Exchange Commission, the Financial Industry Regulatory Authority, state insurance departments, and other agencies allow this practice to continue. The tainted financial advice costs Americans about $17 billion every year.>