Oh buddy. I’m going to share a recent exchange I had with a client regarding what a friend heard from his “advisor” regarding the new DOL Fiduciary rule that is likely to be in place in the next year. This is copied, verbatim, with permission from my client.
“This is the real deal folks. I spoke with my investment advisor. ANY company, broker managing a retirement fund, annuity, IRA, stocks held as retirement investments, etc., will have to start charging an annual ‘administrative’ fee per mandates issued by the Department of Labor (DOL) to ‘protect’ you, the hapless citizen, from being bilked by said Investment firms. These firms MUST comply. DOL has tried to get this through twice before. Now it is coming. The regulations will have to be implemented NLT 31 December 2016. This does not need congressional approval. Remember, the government is ‘protecting’ you, so you must pay. My humble opinion is that the banks and major investment firms will benefit the most. The lowly consumer is being taxed again. And Uncle Sam is complicit in all of it.”
First of all, there’s so many things wrong with this I can barely figure out where to start. But my primary concern here is that this investor is hands-down being lied to by his “advisor” about the upcoming regulation. The tactics here are amazing and the “advisor” has used fear to quickly turn the investor against regulation designed to protect him from predatory practices by the “advisor” himself!
What’s more, obviously the banks and “major investment firms” aren’t the ones to benefit the most from the fiduciary ruling. If they were, they wouldn’t have spent the last five years and millions and millions of dollars lobbying against the ruling.
Ultimately, the lesson here is that if your “advisor” is willing to lie to you about being forced to act in your best interest, what has he been lying to you about for the life of your relationship? Plenty of other professions operate in a healthy market with a best-interest standards. Can you imagine the public uproar if lawyers were no longer required to act in their clients’ best interests? The problem is information asymmetry – practically no client knows as much as their attorney about the law. And the same is true with the average investor and financial professional. A best-interests standard is good for investors, period. If there was ever evidence that such a standard is required, this email from a broker’s client is it.
Bason Asset Management 