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The fiduciary rule. Someone in the know please give an unbiased summary.
Posted on 2/3/17 at 12:43 pm
Posted on 2/3/17 at 12:43 pm
First off, I voted Trump so this is not an attack, just a question.
So the fiduciary rule as I know it is supposed to require that financial folks hired to be in charge of your retirement investments always do it in your best interest.
From my personal standpoint, this rule is not a bad idea because I guarantee most of America (including myself) doesn't understand all of the 401k stuff. I think its terminology is purposely convoluted and guarantees financial advisors/investors a job.
If you don't work with this stuff every day, you're not going to understand it beyond a basic level.
As such, I liked the rule that the folks who were in charge of this stuff had to have some accountability.
Trump is rolling this rule back now correct, because of "unintended consequences"? Can someone in the know break it all down for me and explain why he would be getting rid of this rule?
So the fiduciary rule as I know it is supposed to require that financial folks hired to be in charge of your retirement investments always do it in your best interest.
From my personal standpoint, this rule is not a bad idea because I guarantee most of America (including myself) doesn't understand all of the 401k stuff. I think its terminology is purposely convoluted and guarantees financial advisors/investors a job.
If you don't work with this stuff every day, you're not going to understand it beyond a basic level.
As such, I liked the rule that the folks who were in charge of this stuff had to have some accountability.
Trump is rolling this rule back now correct, because of "unintended consequences"? Can someone in the know break it all down for me and explain why he would be getting rid of this rule?
6
Posted on 2/3/17 at 12:44 pm to bodask42
quote:
Can someone in the know break it all down for me and explain why he would be getting rid of this rule?
Lobbyists investing in his hotels?
Posted on 2/3/17 at 1:01 pm to bodask42
quote:It elevated any financial professional working with retirement plans or providing planning advice to the level of a fiduciary. Fiduciaries act in the best interests of their clients, and must put their clients' interests above their own. They must disclose any potential conflict of interest, any fees, and any commissions to clients.
The fiduciary rule. Someone in the know please give an unbiased summary.
Sounds good, right?
In reality though, compliance paperwork and documentation involved is obscene. In other words, for the vast majority of honest brokers, the ultimate cost of compliance passed on to the consumer significantly exceeds any "hidden" commissions, fees, etc.
Posted on 2/3/17 at 1:02 pm to bodask42
Im an advisor and have been acting as a fudicuary for my clients for 15 years. I like rule. Too many salesmen out there acting like advisors pushing only annuity products. That being said, i believe it'll hurt small investors.
Posted on 2/3/17 at 1:12 pm to bodask42
quote:
So the fiduciary rule as I know it is supposed to require that financial folks hired to be in charge of your retirement investments always do it in your best interest.
It would be nice if a rule could magically make an advisor do a better job, but at the end of the day, it's only more regulation and paperwork. The FA will only need to have the client sign the Best Interests Contract Exemption at account opening (which the client won't read anyway). It will only cause more paperwork and cost for the good advisors and the bad advisors will recommend the same products and just have the clients sign one more form at account opening.
I know a lot of brokers are going independent because of the rule. Fee-based advisors sound good in theory, but a person only needs to pass 1 exam and then he/she can trade uncovered options, leveraged ETFs, etc. They are their own compliance unless they use a consultant. Brokers at least (who this rule largely affects), have to pass the series 7 and typically work for larger broker-dealers who have large compliance departments.
Posted on 2/3/17 at 1:16 pm to bodask42
In practice this won't change much. The rule change was late in the Obama admin and I don't know of any ERISA case that got brought that wouldn't also have succeeded under the old standards.
401Ks are still shitty compared to IRAs. Just get that match money and then run to Vanguard.
401Ks are still shitty compared to IRAs. Just get that match money and then run to Vanguard.
This post was edited on 2/3/17 at 1:17 pm
Posted on 2/3/17 at 1:25 pm to Iosh
quote:
401Ks are still shitty compared to IRAs. Just get that match money and then run to Vanguard.
Is this generally the case? Every 401k plan I've participated in has given me access to low cost index funds.
Posted on 2/3/17 at 1:52 pm to Anfield Road
quote:Generally, yeah. You're lucky. LINK
Is this generally the case? Every 401k plan I've participated in has given me access to low cost index funds.
Posted on 2/3/17 at 2:11 pm to gatorsimz
quote:
I know a lot of brokers are going independent because of the rule
I'm not sure if this is really the case. I'm in the industry as well and I've seen quite the opposite. Just bc you're independent and act in a fiduciary manner does not alleviate you from being sued.
If you're independent and a class action lawsuit is brought against you, you're gonna have a much more difficult time defending that/hiring private counsel than someone with a major firm and corporate attorneys who've delved out a process the FA must work through to prove his recommendations.
Posted on 2/3/17 at 2:27 pm to Shepherd88
I know of one "good neighbor" that will completely cease the sale of certain annuity and other investment vehicles due to this rule change.
Posted on 2/3/17 at 2:40 pm to DCtiger1
State Farm and several others exited the mutual fund business altogether bc of this.
Posted on 2/3/17 at 2:51 pm to Shepherd88
Yep. Huge impact on Agency contracts and entire departments are being repurposed.
Posted on 2/3/17 at 2:56 pm to Iosh
quote:
401Ks are still shitty compared to IRAs. Just get that match money and then run to Vanguard.
Overall, you are right. I would say the change may hurt a few smaller investors but they would have to be total idiots on the investing end at that.
Posted on 2/3/17 at 2:59 pm to bodask42
The rule is a great idea but like most regulation it gets bogged down in the details.
If people would just start using more fee-based advisors, this problem goes away.
If people would just start using more fee-based advisors, this problem goes away.
Posted on 2/3/17 at 3:04 pm to LSUFanHouston
quote:
If people would just start using more fee-based advisors, this problem goes away.
Yep. I mean, there is already a fiduciary rule when you are working with a certified financial adviser and fee-based advisor. This rule is a shining example of good intentions that cause more headaches than actually help anything.
Posted on 2/3/17 at 3:06 pm to BamaAtl
Ever anything resembling truth in your comments?
This post was edited on 2/3/17 at 3:11 pm
Posted on 2/3/17 at 3:06 pm to larry289
quote:
quote:
Brian is one of my best friends and the Godfather of my son
What?Posted on 2/3/17 at 3:12 pm to Mo Jeaux
Mo Jeaux
It was a copy and paste from another thread...I fixed it. Need to remember to proof first!!!!
It was a copy and paste from another thread...I fixed it. Need to remember to proof first!!!!
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