DOL Fiduciary Failure #003-NAPFA is Conflicted

February 10, 2017

As a follow-up on my disappointment with NAPFA’s lack of a principled stand, I want to challenge NAPFA members to support NAPFA’s fiduciary rule support on principle.

 

NAPFA has yet to comment on the Equity Indexed Annuity exemption comment period.

 

However, they have signed on to a website coalition that released a statement that says, that consumers have benefit from “lower fees, more options and firms developing additional ways to serve middle-income Americans.”

 

I challenge NAPFA to poll members on their fee level, and their anticipation of future fees.

 

The DOL Rule has removed market participants and increased expenses on advisors. Regulation does not “lower fees and increase options.” Regulation removes transactions that would clear in a free market, which, naturally means higher costs and fewer options.

 

Firms have sold. Firms have stopped offering products. Firms have moved clients from free accounts, or accounts that a commission was paid years ago, into accounts that charge ongoing management fees.

 

I have seen this from my own prospects. I have seen it from consumer websites.

 

If NAPFA believes that the fiduciary rule and the increased obligations on its member is leading to ‘lower costs’ and ‘more options’ I would like to see a study on how that is possible from regulation.

 

The reality is that consumers are being moved from a system that was trying to serve more Americans in a ‘true fiduciary’ model, to one that will have these investors served by conflicted robo-investment firms and mutual fund producers.

 

Dalbar estimates that the fiduciary rule will cost firms $500-1,000 per client per year.

 

NAPFA can not honestly say that fees are decreasing, while true fiduciary advice is serving more individuals at this increase in costs.

 

NAPFA, as a non-profit and fiduciary to its stakeholders, is now in conflict with them. As fiduciaries, they should not release information that is harmful to their members.

 

I look forward to their survey.

 

 

 

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