DOL Fiduciary Ruling

[Chef Jim]

The Obama administration has been pushing hard to require Financial Advisors to act as a fiduciary while working with clients ERISA (retirement) accounts. This is not a good direction to go in several ways.

 

1. This will eliminate smaller clients from getting the help that they need. In order to be a fiduciary accounts would need to be set up in a fee based type of account. Most, if not all, of them have minimums usually $25k-$50k. This will force the smaller client who is just getting started to do their planning on their own. The biggest issue with people not having enough at retirement is getting started. If they don't have someone telling them how to get started they typically don't. So this ruling will mostly hurt the middle class that the left is always championing.

 

2. This will make it very hard for new, young advisors from breaking in to this industry. If you eliminate the commission based sale of up front A-share mutual funds it will be very hard for them to make money. For instance if you have $5m under management and you tack on a 1% fee that's $50,000 in gross and the average rep sees 40-55% of that. First off how quickly can someone new to the industry accumulate that much in AUM and how will they feed themselves in the meantime? Paying them a salary is an option however bottom lines for many firms is tight to begin with.

 

3. This is another of Obama's legacy plays. He doesn't like financial advisors referring to them as "snake oil salesmen." Because this is the responsibility of the DOL who reports directly to the President there is no congressional vote on this.

 

4. Are there bad apples in this industry? Absolutely but there are in any industry. However requiring advisors to become fiduciaries (placing their client's interest before theirs) will no way guarantee that is what's going to happen. Just a quick reminder. Bernie Madoff was a fiduciary.

 

5. And here's the kicker. An advisor could have a client with $50,000 in IRA money that inherits $5,000,000 of non-retirement assets from their parents. Under this ruling the advisor would be required to be a fiduciary for the $50,000 but do whatever the hell they wanted with the $5,000,000. Once again our government pushing something through without thinking it through first.

 

Discuss..............

[TakeYouToTasker]

More importantly, it also vastly expands exactly who is considered a fiduciary.

 

The large wire houses and brokerage firms, and their call center representatives will also be slapped with the label. The fallout for this will be that those firms will no longer answer questions or provide options to people holding work place accounts. The small investor will no longer have access to the retirement advice they need.

 

It will also impact the entertainment industry. People like Suze Orman and Jim Kramer will also be considered fiduciaries, and will go off the air.

[KD in CA]

But....but....financial advisers = Wall Street = rich, greedy, 1% who should be sued every time the markets drop.

 

 

[/average Obama voter]

 

 

 

 

p.s. I was named fiduciary of my old company's 401(k) plan for a while. And then a few people would ask "Why don't we have self directed accounts?" Uh....I don't think so. I couldn't get rid of that whole deal fast enough.

Edited March 9, 2016 by KD in CT

[DC Tom]

The Obama administration has been pushing hard to require Financial Advisors to act as a fiduciary while working with clients ERISA (retirement) accounts. This is not a good direction to go in several ways.

 

1. This will eliminate smaller clients from getting the help that they need. In order to be a fiduciary accounts would need to be set up in a fee based type of account. Most, if not all, of them have minimums usually $25k-$50k. This will force the smaller client who is just getting started to do their planning on their own. The biggest issue with people not having enough at retirement is getting started. If they don't have someone telling them how to get started they typically don't. So this ruling will mostly hurt the middle class that the left is always championing.

 

2. This will make it very hard for new, young advisors from breaking in to this industry. If you eliminate the commission based sale of up front A-share mutual funds it will be very hard for them to make money. For instance if you have $5m under management and you tack on a 1% fee that's $50,000 in gross and the average rep sees 40-55% of that. First off how quickly can someone new to the industry accumulate that much in AUM and how will they feed themselves in the meantime? Paying them a salary is an option however bottom lines for many firms is tight to begin with.

 

3. This is another of Obama's legacy plays. He doesn't like financial advisors referring to them as "snake oil salesmen." Because this is the responsibility of the DOL who reports directly to the President there is no congressional vote on this.

 

4. Are there bad apples in this industry? Absolutely but there are in any industry. However requiring advisors to become fiduciaries (placing their client's interest before theirs) will no way guarantee that is what's going to happen. Just a quick reminder. Bernie Madoff was a fiduciary.

 

5. And here's the kicker. An advisor could have a client with $50,000 in IRA money that inherits $5,000,000 of non-retirement assets from their parents. Under this ruling the advisor would be required to be a fiduciary for the $50,000 but do whatever the hell they wanted with the $5,000,000. Once again our government pushing something through without thinking it through first.

 

Discuss..............

 

Sounds like the long-term effect will be to force the majority of Americans to rely on Social Security rather than their own retirement savings...

[\GoBillsInDallas/]

People like Suze Orman and Jim Kramer...will go off the air.

 

And this is bad because?

[TakeYouToTasker]

 

Sounds like the long-term effect will be to force the majority of Americans to rely on Social Security rather than their own retirement savings...

You'll note that the DOL rules are being implemented at the exact same time the Government rolled out the "myRA".

 

The government wants access to the roughly 20 trillion dollars that Americans have in their retirement accounts, and this is their plan to get it.

[Pine Barrens Mafia]

You'll note that the DOL rules are being implemented at the exact same time the Government rolled out the "myRA".

 

The government wants access to the roughly 20 trillion dollars that Americans have in their retirement accounts, and this is their plan to get it.

Motherment...smothering us all since 1915

[Chef Jim]

More importantly, it also vastly expands exactly who is considered a fiduciary.

 

The large wire houses and brokerage firms, and their call center representatives will also be slapped with the label. The fallout for this will be that those firms will no longer answer questions or provide options to people holding work place accounts. The small investor will no longer have access to the retirement advice they need.

 

It will also impact the entertainment industry. People like Suze Orman and Jim Kramer will also be considered fiduciaries, and will go off the air.

 

I also read an article that will limit the ability for advisors to answer questions at workshops because they are not a fiduciary for the person asking the question. So some where saying this becomes a First Amendment issue.

 

And this is bad because?

 

Kramer's a waste. Orman is pretty bad too but what she does do is get people at least thinking about investing. I get referrals from Dave Ramsey. They are some of the most motivated people I meet with. I don't agree with everything he says but damn they spill their guts over the phone before I even meet them. And they come prepared.

[TH3]

.

 

2. This will make it very hard for new, young advisors from breaking in to this industry. If you eliminate the commission based sale of up front A-share mutual funds it will be very hard for them to make money. For instance if you have $5m under management and you tack on a 1% fee that's $50,000 in gross and the average rep sees 40-55% of that. First off how quickly can someone new to the industry accumulate that much in AUM and how will they feed themselves in the meantime? Paying them a salary is an option however bottom lines for many firms is tight to begin with.

 

 

You mean the party guys/varsity letter winners from high school who couldn't get a real job - whose real skill is knowing a lot of people to rope in as opposed to actually understanding the economy?

Edited March 9, 2016 by baskin

[jjamie12]

 

You mean the party guys/varsity letter winners from high school who couldn't get a real job - whose real skill is knowing a lot of people to rope in as opposed to actually understanding the economy?

You're such an ass. Really and truly. Wake the eff up.

[Chef Jim]

 

You mean the party guys/varsity letter winners from high school who couldn't get a real job - whose real skill is knowing a lot of people to rope in as opposed to actually understanding the economy?

 

No but thanks for playing.........sort of.

[TakeYouToTasker]

 

You mean the party guys/varsity letter winners from high school who couldn't get a real job - whose real skill is knowing a lot of people to rope in as opposed to actually understanding the economy?

This is a pretty dopey thing to say.

[Chef Jim]

This is a pretty dopey thing to say.

 

I think he was probably the varsity letter winner guy who couldn't get a real job who knew a lot of people and washed out in this industry because he thought it was about understanding the economy.

[GG]

 

It will also impact the entertainment industry. People like Suze Orman and Jim Kramer will also be considered fiduciaries, and will go off the air.

 

There's always a silver lining

[Nanker]

You'll note that the DOL rules are being implemented at the exact same time the Government rolled out the "myRA".

The government wants access to the roughly 20 trillion dollars that Americans have in their retirement accounts, and this is their plan to get it.

Exactly.

[....lybob]

 

You mean the party guys/varsity letter winners from high school who couldn't get a real job - whose real skill is knowing a lot of people to rope in as opposed to actually understanding the economy?

Nobody understands the economy - the real question is how many of these fine lads can beat their benchmark indexes over a five year period? answer not many so most people would come out ahead just putting their money in a Vanguard fund at 25-10 basis points - I don't know what's going to be offered in "myRA" but the Federal Thrift Savings Plan (TSP) offers investments with costs of around 3 basis points- pretty hard to beat over the long term.

[DC Tom]

Nobody understands the economy - the real question is how many of these fine lads can beat their benchmark indexes over a five year period? answer not many so most people would come out ahead just putting their money in a Vanguard fund at 25-10 basis points - I don't know what's going to be offered in "myRA" but the Federal Thrift Savings Plan (TSP) offers investments with costs of around 3 basis points- pretty hard to beat over the long term.

 

The "myIRA" plan invests money into government bonds. Basically, it's a way of conning people to hand over their savings to finance deficit spending, not entirely unlike what the Germans tried in the late-30's.

[TakeYouToTasker]

Nobody understands the economy - the real question is how many of these fine lads can beat their benchmark indexes over a five year period? answer not many so most people would come out ahead just putting their money in a Vanguard fund at 25-10 basis points - I don't know what's going to be offered in "myRA" but the Federal Thrift Savings Plan (TSP) offers investments with costs of around 3 basis points- pretty hard to beat over the long term.

The role of an advisor is not to beat the bench mark indexes, it's great if they do, but it's not their purpose.

 

Their purpose is to provide educated access to a wide variety of financial products designed for different people and situations, to help investors come up with detailed long and short term plans taking into account all factors that may impact them, to help individuals transition smoothly into retirement, and most importantly to guide their clients and help make sure they aren't making major mistakes out of ignorance or emotion which will harm their finances.

 

The myRA is an undiversified platform which offers access to a single US Treasury security. The security offers a variable rate of return, and uses calculation projections using an interest rate of 2.5%.

Edited March 9, 2016 by TakeYouToTasker

[Chef Jim]

Nobody understands the economy - the real question is how many of these fine lads can beat their benchmark indexes over a five year period? answer not many so most people would come out ahead just putting their money in a Vanguard fund at 25-10 basis points - I don't know what's going to be offered in "myRA" but the Federal Thrift Savings Plan (TSP) offers investments with costs of around 3 basis points- pretty hard to beat over the long term.

 

If that's the case then why does the average Joe who does this on their own greatly underperform the benchmark. I know the answer but let's see if you can come up with it.

The role of an advisor is not to beat the bench mark indexes, it's great if they do, but it's not their purpose.

 

Their purpose is to provide educated access to a wide variety of financial products designed for different people and situations, to help investors come up with detailed long and short term plans taking into account all factors that may impact them, to help individuals transition smoothly into retirement, and most importantly to guide their clients and help make sure they aren't making major mistakes out of ignorance or emotion which will harm their finances.

 

The myRA is an undiversified platform which offers access to a single US Treasury security. The security offers a variable rate of return, and uses calculation projections using an interest rate of 2.5%.

 

Simple answer the role of the financial advisor is to control behavior.

[DC Tom]

The myRA is an undiversified platform which offers access to a single US Treasury security. The security offers a variable rate of return, and uses calculation projections using an interest rate of 2.5%.

 

It's also the ultimate in "Too Big to Fail" risk, if you think about it.