Who says Republicans have the people's best interest at heart?
From: https://www.washingtonpost.com/busi...b30806-21d1-11e6-b944-52f7b1793dae_story.html
Republicans controlling the Senate passed legislation Tuesday to block new Obama administration rules that require financial professionals to put their client’s best interest first when giving advice on retirement investments like individual retirement accounts.
The Senate passed the legislation to roll back the rules by a mostly party-line 56-41 vote. The regulations are aimed at blocking financial advisers from steering clients toward investments with higher commissions and fees that can eat away at retirement savings.
The new regulations, commonly known as the “fiduciary rule,” require advisers who charge commissions to sign a promise that they will act in the client’s best interests, earn “reasonable” compensation and disclose information about fees and conflicts of interest. It will take effect next April.
“It’s pretty simple. It says if you’re giving people advice on their retirement accounts, you should put the clients’ best interests ahead of your own,” said Sen. Patty Murray, D-Wash. “We’re here today because Republicans want to block that new rule from helping families. That’s just wrong.”
Republicans block stricter rules on retirement savings
Discussion in 'News & Current Events' started by Crabtownboy, May 25, 2016.
Page 1 of 2
-
Crabtownboy Well-Known MemberSite Supporter
-
What is their reasoning for blocking it?
-
Oh now I see:
"
Republicans say the rules would establish a new fee structure that might not be worth the broker’s trouble, and consumers won’t be able to get the advice they want. Instead, opponents say, retirees may have to seek higher-priced advice or fend for themselves. They point to the experience of Great Britain, which has imposed a similar rule.
“The result was that people with smaller savings accounts lost access to retirement advice,” said Sen. Lamar Alexander, R-Tenn. “Many firms quit providing face-to-face advice for small accounts. A quarter of all small firms were forced to close shop all together.”
“This exemplifies the paternalism that has typified this administration when dealing with the economy,” said Sen. John Cornyn, R-Texas. “They don’t actually believe that consumers know how to make good choices for themselves so they’re going to force a ... one-size-fits-all standard on the financial services industry.”"
It's amazing how understanding all of the facts really makes a difference. -
But the reporting is . . . "Republicans controlling the Senate passed legislation Tuesday to block new Obama administration rules that require financial professionals to put their client’s best interest first when giving advice on retirement investments like individual retirement accounts."
So maybe CBT can explain how the legislation does just that . . . ? -
Crabtownboy Well-Known MemberSite Supporter
I went to a dinner meeting given by a financial adviser a few years ago. He sounded good at the meeting. I set up an appointment with him, took my financial information to him. We made a second appointment for two weeks later. At that meeting he gave his advice. It sounded good until I began to question him. He had recommended putting money into a type of business that promised at least 7% a year. This he emphasized. What he did not say was how much of that 7% he took as an annual fee. He never brought up his fee until I asked him. Turns out his fee was 4%, meaning he would make more off my account than I. The 7% he had emphasized was only 3% before taxes. Not only that, in this venture, my money was to be locked up for at least 5 years. I would have no access to it, regardless of my needs, during that period of time. He did not emphasize this either until I ask. There was no requirement for him to be upfront and honest in his advice. I did not invest any money through him.
This is not an uncommon story. Of course, I had gone into the meeting a bit skeptical. I had learned years earlier that it is often unwise to listen to the advice of a stock broker. We could go into the reasons why if you would like.
When dealing with stock brokers or financial advisers be extremely careful and always skeptical. Ask lots of questions and do your research. -
-
Crabtownboy Well-Known MemberSite Supporter
Also, nothing like this is simply just a simple reason. Sure there are other reasons, but to simply say that an adviser is required to be honest should not be a problem for anyone. -
And the GOP voters are against this because it forces the financial professionals to not want to help small investors?
And the small firms who were obviously providing higher commissioned advice but not necessarily the most financially prudent advice were forced per Sen. Lamar, to close shop? ANd that's a bad thing?O O -
Crabtownboy Well-Known MemberSite Supporter
Some folk on the board seem to always be in favor of business profits at their own expense. -
InTheLight Well-Known MemberSite Supporter
Yet another example of a liberal's belief that good intentions outweigh whatever outcome would occur. Liberals don't care what the actual outcome of their plans are, so long as they have good intentions.
2. Investment advisers are to "sign a promise" to act in the client's best interest. Laff-able. See: Liberals, good intentions.
3. Investment advisers are to "earn reasonable compensation". Read: "earn what the government will dictate to them." This could be the toehold for salary caps on rich people and CEOs.
Bad legislation all around.
BTW, there already are "fiduciary rule" investment advisors. All an investor need do is select one of them. (They typically get paid by the hour, not with commissions.) A simple question up front, "will you sign a fiduciary rule statement to act in my best interest" is all that is needed to find these people. It's not difficult. -
Crabtownboy Well-Known MemberSite Supporter
-
InTheLight Well-Known MemberSite Supporter
A good example is ObamaCare: Idea was to bring down health insurance costs while allowing you do keep your own doctor. How did that work out?
-
-
Crabtownboy Well-Known MemberSite Supporter
Do you have any experience with a financial adviser. -
Crabtownboy Well-Known MemberSite Supporter
A person should carefully examine any investment an adviser suggests. Too many just go on his/her advise and do not explore whether the investment has excessive fees or if it is a good investment. The adviser will get his/her cut and the investor takes the risk, say a capital loss.
The old adage that "if it sounds too good to be true it is too good to be true."
Investing in a REIT is popular among financial advisers. In general people do not know much about them and their dangers. In general they do provide nice fees to the adviser, but often with great risk to the investor. -
InTheLight Well-Known MemberSite Supporter
The regulations are aimed at blocking financial advisers from steering clients toward investments with higher commissions and fees that can eat away at retirement savings.
Let's look at this, shall we? Here's a hot mutual fund, Eventide Gilead ETGLX. It is a "Christian" fund or an "socially responsible" fund in that the fund managers are professing Christians and they only invest in companies that meet their ethical standards.
While it is a no-load fund, it's expense ratio is high to very high at 1.35%. (C shares of this fund have a 2.15% expense ratio.) Surely, this fund would be disqualified by the proposed law.
Had you invested $10,000 in this fund in 2008, before the crash, you would have $26,082 today.
Had you invested $10,000 in a low fee, low expense S&P 500 index fund before the crash, you would have $19,280 today.
I bet I could find over 100 examples of funds that beat the S&P500, but charge high fees and expenses. Should customers be "blocked and steered away from these funds"?
A smart investor doesn't use fees and expenses as the only guideline, after all, it is total return that is the gold standard for investments, not low fees. I would rather pay 1.5% in fees and make a 9.5% return than pay 0.5% in fees and make an 8% return.
-
HankD -
InTheLight Well-Known MemberSite Supporter
BTW, I'm not invested in Eventide Gilead. It's too volatile for my age and investment objectives. But if I were a younger investor I might put some money into it (as a part of a diversified portfolio.)
-
Crabtownboy Well-Known MemberSite Supporter
It does appear rather volatile. You are right. It might be a good fund to look into if a person is young.
I never invested in mutual funds but in stocks and convertible bonds when I was younger. I kept point and figure charts on about 50 companies and made my investment decisions from the charts. Convertible bonds have some advantages over a companies stock. -
InTheLight Well-Known MemberSite Supporter
Also, if investment firms were to only be allowed to offer low fee, low expense investment choices they wouldn't be in business very long.
Page 1 of 2