Posted on 02/03/2017 8:01:21 AM PST by ColdOne
Obama’s rule seems awfully vague and prone to lawsuits. How do you prove that a financial advisor is or is not working in the best interest of the client.
This would be like dictating that a grocery store must be working in the best interest of its customers.
Let the BUYER be ware! Competition is what causes the merchant to want to treat his customers well.
If you worked in the industry you would know Obungo’s Fiduciary Rule was bad from the start, limited choices for investors, drove up costs, would trigger more lawsuits, smaller clients would not be served properly, and now everyone would have a Stalinesque commissar’s one size fit’s all type mentality. In the pencil pusher’s world this works perfectly, in the trenches it does not. I’m a CFP and have worked in this industry for over 25 years helping thousands of people over that time. Those who don’t work in this industry truly don’t know what they’re talking about. Getting rid of the mandatory fiduciary rule is removing excess regulations and is DEFINITELY a positive thing for consumers as well as the financial services industry.
It's well understood in the investment community. Fee-based advisers have been operating under this standard for a long time.
The main change here would apply the standard to commission-based retirement advisers like brokers or insurance agents.
Their current standard is suitability for any product they sell to a retirement investor, and that standard will likely remain if the new rule doesn't go into effect.
Great reply, thanks! the "ADV" should say what the fee's are, but you are correct, fees on the innerwebs for all to see would be the way to go for Finance and Health-Care.
Like the one against Vanguard for high cost? Yes, people don't get the industry, it is a completely different perspective on the other side of the desk. On Obama's rules, I hear compliance cost are off the Richter Scale. Love you feedback on the that last point.
The feds forcing bad loans to the uncreditworthy.
The fiduciary rule was not well thought out. The SEC will probably keep some of the good parts, kill the bad parts and rewrite it.
What was it again that was responsible for the housing meltdown?
NINJA loans. No income, no job. The greatest democrat invention since the War on Poverty.
And BTW, Bush did try to fight against this, but gave up when the amoeba republicans in congress didn’t lift a finger to help him.
Next should be a “review” of Sarbanes-Oxley, and Davis-Bacon...they need to be tossed as well.
Could be worse.
“Holder-Frank”
LOL
That’s an example of a reasonable involvement of government in interstate commerce: an industry develops systemic abuse of customers, who have little option beyond simply not engaging in that industry at all (which has worse consequences than just putting up with their $#!^). There’s no incentive to not be abusive because it’s so profitable to be abusive that everybody does it, and customers see _not_ participating as a worse option. It’s an abusive yet still symbiotic relationship.
The correct solution, as you noted, is transparency: just let the customer know who is actually paying the service provider how much. When you’re expecting to be the customer, but you’re actually & unwittingly the product, you’re screwed.
As others noted, lenders were compelled by law to loan money to people who everyone knew likely wouldn’t pay back.
What others are missing, lenders solved the obvious problem with that by buying insurance against those defaults ... unfortunately the insurers were other lenders, who insured their own insurance service by buying insurance from other lenders, and the relatively small number of big lenders ended up insuring _themselves_ by proxy. Ergo, when a big enough aggregate defaults hit, lender A made an insurance claim from B, who made an insurance claim from C, who ... made an insurance claim from A! result was bad loans were insured by, well, nobody; the whole chain fell down, and would have taken the entire economy with it (we’re talking seriously big banks here being compelled to make a seriously large number of seriously bad loans) had not the President stepped in, called all the top executives into a room, and told them exactly what to do and that they would go to jail for life if they didn’t.
It just raised my suspicions. Any reporting that amounts to implicitly demonizing corporations is usually biased. Glad it was actually fair.
What the reporting didn’t do was clarify that there was a sensible third way to handle the issue, which the gov’t failed to allow as an option: transparency, requiring informing investors who was paying the advisor how much (so the investor could know whether he was a customer or a product).
Winning!
I’ve been a licensed rep for 25 yrs.
This DOL rule really is just the effort of left wing politics to start their encroachment of the financial services industry. The end game was probably to eliminate the retail side of investment advice, and centralize it all for the mega institutions. Like all things govt, this is about MONEY AND POWER for the Govt.
Brokers are ALREADY required to act in the best interest of the clients. We are subject to FINRA rules and regulations, and any investor that feels duped/betrayed/misled by their broker has recourse through industry arbitration that is cheaper and better than civil action. To suggest otherwise, as these articles today state, is LAUGHABLE.
I went through a employment contract dispute with a former employer through FINRA arbitration. Very efficient and fair procedure. Everything that I’ve seen about industry arbitration indicates it is very fair to all parties involved.
True that.
...requiring informing investors who was paying the advisor how much (so the investor could know whether he was a customer or a product).
I'd like that too but I'm afraid you would end up like the mortgage industry with dozens of disclosure documents that no one actually reads because their eyes glaze over.
If there's money to be made by obscuring things, and in this case there is, things will be obscured.
Dodd-Frank...Didn't I just read something on Drudge about them having sex in a Bed Bath and Beyond store?
Hint: statists and left wing authoritarians wrap everything in the “it’s for the children” (TM). That is how it is written and portrayed for the public. as if all they really care about is their altruistic philanthropic concern for the health and financial well-being of their fellow citizens.
Be cynical.
Thank you all for taking the time to reply and explain. I think I get it, but will have to mull it over a while.
Have a Blessed day, Litany.
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