Threat to Dodd - Frank Act Specifically broker fiduciary duty
Linda Glein on
This seems like a big concern to individual investors if the
current administration wants to remove this from the
Dodd-Frank Act. (The DFA gives SEC the authority to impose a
fiduciary duty on brokers who give investment advice -- the
advice must be in the best interest of their customers.)
Thoughts?
Actions?
Mark Eckman on
A rather large controversy has blown up with this as the SEC has not issued a fiduciary rule. The fiduciary rule that now exists is from the Department of Labor and is directed at 401k and IRA investors. If you look at the actions taken so far by some brokerages, that is where they have made changes.
While i agree there are bad actors in the investment world and that will continue at some level regardless. But this rule is a layer of bureaucracy, not prevention and not education so "let the buyer beware" can be useful.
The DOL rule provides a valuable protection for those investors that have no business being in the stock market. If you buy and sell strictly on the advice of a broker, you are a lemming, not an investor. Much of this is a problem the SEC has ignored for a long time as they continue enforcement as if we were still in 1934 when the SEC was established. When Ms White left last month she said the SEC could have done more.
Why not screen investors for various financial products in the same way as the brokerages not screen them for options trading? If you your skills put you at risk, don't allow access to the markets. For most people, that is a rather low threshold.
"People get derailed on their way to a happy retirement for
many reasons, but the Obama administration says costly -- or
outright bad -- financial advice shouldn't be what holds you
back.
"A new rule unveiled today by the Obama administration
requires retirement advisers to always act in the best
interest of their client.
"It's pretty obvious if people are expecting financial
advice they should be able to count on the fact that it's
going to be real advice to help improve your situation,"
says Bill Harris, the CEO of Personal Capital and former CEO
of PayPal.
"Many advisers genuinely want to help their clients. But
currently, it is legal for an adviser to get paid more money
(similar to a kickback) if he or she gets you to invest in
fund A instead of fund B.
"For example, an adviser might make $200 if he or she has
you invest $10,000 in a stock fund but only $130 if he or
she has you invest in a bond fund, according to University
of Mississippi law professor Mercer Bullard. Advisers
recommend the fund that pays them more about half the time,
one study found.
"Brokers are salespeople. They sell whatever they and their
firm make the most money on," argues Harris. His firm
already abides by the rule. It charges clients a flat fee
for advice so there's no conflict of interest."
There is more in the link above.
Ed Berners
St. Joseph Valley Investors Club
mmoriarty on
Thank you Ed Berners. Much clearer now.
Sent from my iPhone
> On Feb 5, 2017, at 12:30 PM, Edgar D. Berners <eberners76@sbcglobal.net> wrote:
>
> The website
> http://money.cnn.com/2016/04/06/investing/retirement-investing-fiduciary-rule/
> had this to say last April 6:
>
> "People get derailed on their way to a happy retirement for
> many reasons, but the Obama administration says costly -- or
> outright bad -- financial advice shouldn't be what holds you
> back.
>
> "A new rule unveiled today by the Obama administration
> requires retirement advisers to always act in the best
> interest of their client.
>
> "It's pretty obvious if people are expecting financial
> advice they should be able to count on the fact that it's
> going to be real advice to help improve your situation,"
> says Bill Harris, the CEO of Personal Capital and former CEO
> of PayPal.
>
> "Many advisers genuinely want to help their clients. But
> currently, it is legal for an adviser to get paid more money
> (similar to a kickback) if he or she gets you to invest in
> fund A instead of fund B.
>
> "For example, an adviser might make $200 if he or she has
> you invest $10,000 in a stock fund but only $130 if he or
> she has you invest in a bond fund, according to University
> of Mississippi law professor Mercer Bullard. Advisers
> recommend the fund that pays them more about half the time,
> one study found.
>
> "Brokers are salespeople. They sell whatever they and their
> firm make the most money on," argues Harris. His firm
> already abides by the rule. It charges clients a flat fee
> for advice so there's no conflict of interest."
>
> There is more in the link above.
>
> Ed Berners
> St. Joseph Valley Investors Club
>
Laurie Frederiksen on
This gives a good basic overview of how the Dodd-Frank act came to be:
Mark, I fundamentally agree with the concept that there is a burden on the consumer to have some knowledge of what they are purchasing when they work with a broker. But, investing is complex, just as, for example, medical care is complex.
Consumers now need to be doing more and more of their own investing. If we are all expected to be managing our own retirement finances without the education really needed on how to do that, shouldn't we have a right to expect that the people we are hiring to help us have our best interests in mind? Who can we count on to make sure this is the case if the industry does not regulate itself?
A patient doesn't have to pass a medical proficiency test to undergo medical care and yet there is an assumption that the doctor's recommendations will be in the patient's best interest. This comes about because of strong ethical guidelines that doctors are expected to adhere to.
As the article describes, we wouldn't have the Dodd-Frank regulations if the banking industry hadn't operated as they did. After we just climbed out of the 2008-2009 hole, why would we want to remove procedures that have been put in place to make it less likely it will happen again?
Laurie Frederiksen Invest with your friends! www.bivio.com
Mark, I fundamentally agree with the concept that there is a burden on the consumer to have some knowledge of what they are purchasing when they work with a broker. But, investing is complex, just as, for example, medical care is complex.
Consumers now need to be doing more and more of their own investing. If we are all expected to be managing our own retirement finances without the education really needed on how to do that, shouldn't we have a right to expect that the people we are hiring to help us have our best interests in mind? Who can we count on to make sure this is the case if the industry does not regulate itself?
A patient doesn't have to pass a medical proficiency test to undergo medical care and yet there is an assumption that the doctor's recommendations will be in the patient's best interest. This comes about because of strong ethical guidelines that doctors are expected to adhere to.
As the article describes, we wouldn't have the Dodd-Frank regulations if the banking industry hadn't operated as they did. After we just climbed out of the 2008-2009 hole, why would we want to remove procedures that have been put in place to make it less likely it will happen again?
Laurie Frederiksen Invest with your friends! www.bivio.com
Mark, I fundamentally agree with the concept that there is a burden on the consumer to have some knowledge of what they are purchasing when they work with a broker. But, investing is complex, just as, for example, medical care is complex.
Consumers now need to be doing more and more of their own investing. If we are all expected to be managing our own retirement finances without the education really needed on how to do that, shouldn't we have a right to expect that the people we are hiring to help us have our best interests in mind? Who can we count on to make sure this is the case if the industry does not regulate itself?
A patient doesn't have to pass a medical proficiency test to undergo medical care and yet there is an assumption that the doctor's recommendations will be in the patient's best interest. This comes about because of strong ethical guidelines that doctors are expected to adhere to.
As the article describes, we wouldn't have the Dodd-Frank regulations if the banking industry hadn't operated as they did. After we just climbed out of the 2008-2009 hole, why would we want to remove procedures that have been put in place to make it less likely it will happen again?
Laurie Frederiksen Invest with your friends! www.bivio.com
Mark, I fundamentally agree with the concept that there is a burden on the consumer to have some knowledge of what they are purchasing when they work with a broker. But, investing is complex, just as, for example, medical care is complex.
Consumers now need to be doing more and more of their own investing. If we are all expected to be managing our own retirement finances without the education really needed on how to do that, shouldn't we have a right to expect that the people we are hiring to help us have our best interests in mind? Who can we count on to make sure this is the case if the industry does not regulate itself?
A patient doesn't have to pass a medical proficiency test to undergo medical care and yet there is an assumption that the doctor's recommendations will be in the patient's best interest. This comes about because of strong ethical guidelines that doctors are expected to adhere to.
As the article describes, we wouldn't have the Dodd-Frank regulations if the banking industry hadn't operated as they did. After we just climbed out of the 2008-2009 hole, why would we want to remove procedures that have been put in place to make it less likely it will happen again?
Laurie Frederiksen Invest with your friends! www.bivio.com
If you'd like your portfolio to be evaluated in BetterInvesting Magazine's "Repair Shop" feature, email your valuation statement, a description of your club and how it makes investing decisions, as well as a photo of your members to...
Mark, I fundamentally agree with the concept that there is a burden on the consumer to have some knowledge of what they are purchasing when they work with a broker. But, investing is complex, just as, for example, medical care is complex.
Consumers now need to be doing more and more of their own investing. If we are all expected to be managing our own retirement finances without the education really needed on how to do that, shouldn't we have a right to expect that the people we are hiring to help us have our best interests in mind? Who can we count on to make sure this is the case if the industry does not regulate itself?
A patient doesn't have to pass a medical proficiency test to undergo medical care and yet there is an assumption that the doctor's recommendations will be in the patient's best interest. This comes about because of strong ethical guidelines that doctors are expected to adhere to.
As the article describes, we wouldn't have the Dodd-Frank regulations if the banking industry hadn't operated as they did. After we just climbed out of the 2008-2009 hole, why would we want to remove procedures that have been put in place to make it less likely it will happen again?
Laurie Frederiksen Invest with your friends! www.bivio.com
It's a solicitation from BetterInvesting to have your club's portfolio analyzed for the "Repair Shop" article which is included in each issue of BetterInvesting magazine.
If you'd like your portfolio to be evaluated in BetterInvesting Magazine's "Repair Shop" feature, email your valuation statement, a description of your club and how it makes investing decisions, as well as a photo of your members to...
Mark, I fundamentally agree with the concept that there is a burden on the consumer to have some knowledge of what they are purchasing when they work with a broker. But, investing is complex, just as, for example, medical care is complex.
Consumers now need to be doing more and more of their own investing. If we are all expected to be managing our own retirement finances without the education really needed on how to do that, shouldn't we have a right to expect that the people we are hiring to help us have our best interests in mind? Who can we count on to make sure this is the case if the industry does not regulate itself?
A patient doesn't have to pass a medical proficiency test to undergo medical care and yet there is an assumption that the doctor's recommendations will be in the patient's best interest. This comes about because of strong ethical guidelines that doctors are expected to adhere to.
As the article describes, we wouldn't have the Dodd-Frank regulations if the banking industry hadn't operated as they did. After we just climbed out of the 2008-2009 hole, why would we want to remove procedures that have been put in place to make it less likely it will happen again?
Laurie Frederiksen Invest with your friends! www.bivio.com