Fiduciary Rule Fight Brews While Bad Financial Advisors Multiply

It's interesting how vconnor focuses in on a 70-year-old woman. But no comments about the Cerulli, academic or CFA Institute surveys and studies, especially of 284 Boston-are financial advisors. The Fiducirary Rule (FR) is needed. Only now are investors realizing that brokers, mutual funds, insurance companies, banks and financial planners have not been fiduciaries. It's also interesting how the industry if fighting the FR tooth and nail via the judicial, legislative and executive branches of the U.S. government. Shame on them for so blatantly showing they don't give a darn about their clients.

Steverman hasn’t a clue on what he writes about. Start with his statement about costs of “conflicts of interest among financial advisors.” The estimate, and that’s all it is, comes from the same administration that said Obamacare will cut the average family’s heath care costs by $2500, as well as you can keep your doctor. Both turned out to be factually wrong. Then Steverman goes on to add his personal view that “The actual dollar amount is probably much higher.” Bad advice from the press is likely to be much more costly than bad advice from advisors. The press is never held accountable. Then he proceeds to discuss a client that did all her own research, poured over statements, took classes but fired multiple advisors over two decades. You must wonder if she took advice, or “heard” advice but did her own decisions. No disclosure is given as to what she was doing her own. She may have had all her money market funds earning nothing. No fees but no earnings either. Then she went into stocks and funds with fees. What did she earn on the small cap stocks and funds? She paid fees but no mention of what she earned or lost compared to what she was doing. Half disclosure is as valuable as a defense attorney telling you how their serial killer client is a victim of circumstances and not responsible. Next he offers his opinion about advisors not caring and yet attorneys are “bound to zealously represent you”. Really? Attorneys get paid to drag problems out not solve them. Do you think attorneys ever advise clients to litigate knowing the chance of success is very low? Happens every day. Many attorneys are all about billable hours. Period. The he states “how fees add up” and details how much fees lower the end result. Fees on everything will mathematically lower the end result. But what is the client was in a money market fund at 0.25%, vs. paying a 1% fee and earning just the average historical market ROR of 7%? Net after fees, the client is still better off paying 1%, and earning 6%, than paying zero in fees and netting 0.25%. She may very well have paid fees and still made more money than her own choices. His closing note states “8% of advisors have a record of serious misconduct.” First, that also means 92% of advisors don’t have a record of serious misconduct. I’d match that against lawyers any day except getting disciple records from a Bar Association requires an act of Congress. Finally as your other readers have pointed out, there are many actions that advisors don’t result in compensation and save the client from major losses – such as the hot penny stock they want to buy. So next time Steverman wants to bash some profession, please have him provide real stats vs. his personal feelings and stats from a widely discredited administration.

A large percentage of an advisors job is to keep their clients from making terrible decisions. If I talk a client out of a horrible idea like putting half his money in a penny stock his friend told him about and he takes my advice I don't send him a bill after the call. No transaction happened. No compensation, but could have been the most important advice he has received. Half of and advisors job is hand holding with clients for free. There is a lot of pro bono work involved as an advisor that is not considered at all in these regulations and ridiculous articles. This article assumes we should all be in jail if the client has a fund that has a higher expense than another fund. Most advisors do the right thing for clients or they wouldn't have any. And yes, smaller balance IRA clients are not benefiting from these changes and have less choices available. Can't wait for the sue your advisor attorney commercials to start because an investment went down. Investment laws written by politicians and attorneys. Good call

"The Fiduciary Rule, finalized under Obama and originally set to take effect earlier this year, seeks to cure this disconnect. All advisors were to be required to put clients first when handling retirement accounts," Because you can always trust the government to put your interests first, like they did with our healthcare system. What a joke. Hope you aren't a small investor.