Even if firms wanted to go back, would their customers let them? Presidential attention didn’t just change the rules. It helped change how investors shop for financial help. Journalists had a new excuse to repeat their warnings about conflicted advisers and high fees.
So did comedians. In June, shortly after Obama vetoed a congressional resolution that would have blocked the DOL rule, John Oliver spent most of his show, Last Week Tonight, talking about the dangers of high-fee retirement plans and nonfiduciary advisers. Kristin Chenoweth and Billy Eichner were enlisted to drive home the advice. So far, 5.7 million people have watched Oliver’s video on Youtube. Money Magazine put Oliver on its cover last month, declaring him the year’s “Money Champion.”
For the first time, people seemed to understand what the experts and better-informed investors had been trying to explain — that high fees and conflicts of interest are dangerous for anyone saving for retirement. Those ideas were already driving a surge of money into low-cost index funds and away from expensive actively managed funds. Over the last couple years, they took hold among the wider public.
It started in 2015, when the White House began talking about the issue. For the first time, people began to specifically request “fiduciary” advisers, said Sheryl Garrett, founder of the Garrett Planning Network, which connects people with hourly advice from fiduciary financial planners.
“They didn’t necessarily know what ‘fiduciary’ means, but they have learned [that] they only want to work with a fiduciary,” Garrett said. Those requests only increased over the past year, she said, with many of her customers citing Oliver’s influence.
Congress and Trump may try to dislodge the new regulations, but some of the changes to Wall Street business models and investor perceptions look permanent. The old models relied on customers’ trust, and ignorance. These days, if you’re an adviser sticking to the familiar sales pitch, be prepared for a barrage of tough questions.
You have Obama to blame.
This article was provided by Bloomberg News.