DOL Fiduciary Rule Failure #145 – Consumers Choose

February 2, 2017

As many of the investment providers begin to offer similar portfolios… how does the DOL’s ‘Fiduciary Rule’ address the fact that advisors offer different services at different fee levels?

 

It doesn’t.

 

The market for financial services is diverse. Even so, products and fee levels are converging. Firms will compete more in the future on service differentiation.

 

Imagine if you went to your barber and asked him what the cost to cut your hair was, and he responded with the following questions:

  • What did your last barber charge?

  • Did you get a shave with that?

  • What sort of wait time was there? Could you walk right in? Would you like walk right in service?

  • What else did your other barber do for you? Give you a beverage? Have a big-screen or two? What do you like to watch when getting your hair cut?

 

I don't know about others, but if I were lined up for this interrogation by a barber... they wouldn't be getting my business! 

 

And, even if advisors were to ask a hundred questions, it is not the same as getting to know a person after months and years to make some recommendations. But, even so, in all transactions (well, except coming soon for many financial advisors... just not Equity Indexed salespersons)...  consumers choose who they want to work with. 

 

The DOL’s Fiduciary Rule that penalizes advisors for not asking, documenting, and having procedures to “address” the “conflict” when a consumer makes a choice on trusting an advisor is ludicrous. We also have to say "no" to clients who otherwise would give us a try (although, I'm still not sure when or why we say no, just as I'm sure the DOL has no idea when that should be either). 

 

I may wish as a patron of barbershops that I could have known how badly a few visits turned out, but I’ll never know until I take responsibility for the choice to pay for a service. The consumer has all of the power in a transaction to choose or not to choose a service. All an advisor can do is make their case.

 

The consumer also has the power to leave if the service is inferior (unless, they visit an EIA salesperson who the DOL thinks deserves to give your retirement portfolio a major ‘haircut’ for at least 10-15 years).

 

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