DOL Fiduciary Rule Failure #626-Just Wow

The Trump Administration has asked the Department of Labor to review the Fiduciary Rule - a rule that proponents say will 'protect' investors - but, which I have yet to receive a response to any of the prior 625'ish ideas I've presented here and to them directly that suggest otherwise.

At this point, the rule is not being delayed, stopped, changed, revoked, removed, or one word struck from it.

And, yet, what follows is a blog posted as a response from a proponent 'expert' in the area.

I've yet to receive a response from him about all of the people I've seen ripped off by the rule, or why he and NAPFA are not commenting on a proposed Equity Indexed Annuity exemption during the DOL's comment period, which any true fiduciary knows is one of the worst offenders of conflicted advice.


Black Friday: President Trump Betrays Americans, and Embraces Wall Street Instead

THE BETRAYAL Today President Trump betrayed the American people, as he issued one of his executive orders essentially instructing the U.S. Department of Labor to delay the April 10, 2017 application of the requirement that financial and investment advisers act in the best interests of their clients when providing advice on 401(k) plans and IRAs [Clear.Money note - the executive order did no such thing]. Today President Trump betrayed the people who voted for him. He promised to reign in Wall Street, yet today he gave Wall Street a huge reward - the ability to continue their ways, with no requirement that brokers act in the best interests of their customers [Clear.Money note - Wall Street firms have been profiting mightily by the fiduciary rule, as competitors have gone out of business, and firms are moving clients into high-cost ongoing fee accounts that they believe will comply with the rule]. Today President Trump betrayed Americans, as they seek to save and invest their hard-earned funds for their retirement needs. Tens of millions of Americans are being financially raped, each and every year, by paying excessive fees and costs relating to their investments. Wall Street does such a good job at hiding their fees, many Americans don't think they are paying any fees, or they believe they are paying far less than what is actually imposed upon them. [Clear.Money note - doubt these numbers, fees are disclosed in just about every product and service under law already. Yet, there is one group of individuals that is being lied to - Equity Indexed Annuity clients. DOL supporters and NAPFA so far have not responded to the DOL's proposed fiduciary exemption that is allowing them to have even more of an advantage if the rule remains in place.] Today President Trump betrayed the American economy and job formation. With Wall Street's huge diversion of funds from retirement accounts, less capital is accumulated. In turn, there is less fuel for U.S. economic growth and the creation of American jobs. [Clear.Money note - stocks bought on the secondary market and government bonds are not fueling economic growth and jobs. Take home pay would help with those things. And, fees are not decreasing under this rule which independent firms like Dalbar suggest will cost an advisor between $500-1,000 annually per client. This would put quality financial services out of the picture for just about every non-millionaire.] Today President Trump betrayed American corporations, both large and small. Instead of being provided advice on 401(k) plans by trusted fiduciaries, many American corporations will receive advice from high-priced product salespersons disguised as advisors. The result? Business owners will be on the hook when, inevitably, class-action claims are brought by retirement plan participants. Yet, hiding behind the "suitability" veil, the product salespeople will escape accountability. [Clear.Money note - I'm still waiting to understand how Equity Indexed Annuity salespersons deserve an exemption, but, until then, I'll point out that all of the mutual fund providers and online investment firms that would technically be fiduciaries would not meet the author's definition of fiduciary, so I'm expecting lawsuits anyway. Perhaps he will join me in recommending that retirement plans be opened up to market competition to increase retirement advice and true fiduciary services... but, I get the feeling he enjoys keeping these participants under government's monopoly system so that he can use things like this as threats.] HE PROMISED CHANGE He promised change. But President Trump is just another politician. His billionaire cabinet members, many of whom are drawn from Wall Street, no doubt played a large role in influencing President Trump. [Clear.Money note - I'm going to skip further commentary to stay out of politics and focus on solutions.] He promised to hold Wall Street accountable. He promised to protect the American people. But President Trump has done neither. President Trump made empty promises to his voters. And now we see the result - undue harm will come to his voters, and to many other Americans, by his actions. All so that Wall Street can financially rape the American people. I HAVE SEEN THE HARM. I CONTINUE TO SEE IT. I am a Professor of Finance and Financial Planning. For over 15 years I have been an investment advisor. For over 30 years I have been an estate planning and tax attorney. I know harm when I see it. And I have seen it, in the portfolios of hundreds, if not thousands, of new clients who have sought me out. As I lift the veil on the investments and insurance and annuity products recommended to these clients, nearly always I see total fees and costs of 2%, 3%, and even greater than 4% a year. And the academic evidence is compelling - the higher the investment costs, the lower the returns due to investors. Due to the nature of compounding, often the high fees and costs mean that investors, during retirement, will have 20% less, or 50% less, in their retirement nest eggs. THE PATH FORWARD. It is just and right that EVERY financial and investment advisor should be required to act in the best interests of her or his clients. [Clear.Money note - Sorry, I couldn't help it, EIA salespersons should not be exempt from the DOL rule then.] It is just and right that investment products should compete - not on the basis of how much revenue is shared with product salespeople - but on the basis of their merits. It is just and right that a greater proportion of the returns of the capital markets flow to individual Americans, not to Wall Street and the insurance companies. I urge you to let it be known - to President Trump, to your Senators, and to your Congressional representatives - that this Executive Order should not stand. Mr. President, you have revealed today what you truly are - a friend of Wall Street's millionaires and billionaires. A friend of insurance companies peddling highly expensive products. And you have revealed to your voters, and to all of the American people, that you do not advocate for them. You will not protect them. You are just another sly politician, full of empty promises. So, Mr. President, know this. I will fight you. I will stand up to you. I will speak out against these actions, which will cause tens of billions of losses each year to the retirement accounts of my fellow American citizens. In one fell swoop, by favoring Wall Street over Main Street, U.S.A., you dismally failed to deliver on your own promises to the American people. You will hear more from me. For I will advocate for my fellow Americans, and for the economic future of America itself. And many others will as well. We will not be silenced. And we will remember this Black Friday, and hold you accountable for the harm you have caused today to hundreds of millions of Americans, and to America itself.


So, an executive order that the new President simply asks for more information on a rule... that will be conducted by the same bureaucrats that wrote and supported the rule... causes this level of response?

We can't even get information on an issue any longer?

Since when is gathering information a bad thing?

I hope that somewhere in the investigation, that someone realizes that - "Whoops! We shouldn't have given out exemptions to some of the most conflicted people in the industry!"

What I'm really hoping is that a group like NAPFA would do what the EIA industry has done, and stand up for the interests of its members.

How at all could it be a good regulation that exempts the worst actors, while putting thousands of dollars of costs on the best? (I haven't even mentioned here the 29-page new process the author of this article suggests is mandatory for 'fiduciaries' which I gather would put many true fiduciaries out of business... meanwhile, none of the mutual fund or online firms will be complying with that one I'm sure).

Where, oh where, have the leaders in the holistic financial advice movement gone? When will someone stand up for the interests of the public and true fiduciaries who are being put at greater disadvantages?

I would love to avoid politics, because personal financial (and fiduciary!) shouldn't be political... but I'm very independent minded as well, and this sort of 'leadership' just isn't cutting it for promoting fiduciary advice. Is this the face of leadership for true fiduciaries over the next four years?

Can we get someone that will at least listen to those in government, and give them a second to figure things out before determining they're the devil?

Maybe then we can get someone that tries to give us a few advantages... or, will maybe listen to our ideas on how to expand the reach of true fiduciaries? Not just robots and mutual fund sales channels?

(And I thought I had some dramatic rants trying to inject reason into the fiduciary conversation...)

(And, why is it everyone wants to 'fight' these days, too? What happened to explaining your side with logic and evidence, and listening? It seems the new administration just wants to listen to the DOL, but I really hope they can make the case without the drama! )


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