Obama proposing new rules for financial advisors

[lucas80]

I've been wondering why the giant Wall St. firms haven't been able to shut down these regulatory changes. In short when you go see a financial advisor they have to put you first, instead of steer you to investments that they may be rewarded for getting you to invest in. I think back to my college days when one of my jobs was delivering catered lunches to an investment firm in IC. The Fidelity guy was always the biggest tipper when he bought the members of the firm lunch. And, when he bought everybody in the office could order something, even the secretaries. I wondered if I was in investor in Fidelity products just how much of my money was going to free lunches and tips to the guy delivering them? I also wondered if the people getting the free lunches were pushing Fidelity stuff in return?
I wonder more now that my 401k is run by Fidelity. It'll be interesting how much actual change these proposed regulations create, and if individual investors will be better served.

http://thinkprogress.org/economy/2015/04/14/3646925/dol-fiduciary-rule-proposal/

 

[L. Wade Childress]

there really isn't a practical difference between working with one over the other. some suck, some are good, they are all just trying to make a living.

 

[lucas80]

The point isn't about some being good, or some being bad. These regulations are designed to make the financial advisor work for you first. To make them disclose if someone is giving them perks to steer you towards their products, and to force them to put your wants/needs first.

 

[SoDakHawk]

Their are licensed advisors that already exist. They are called a fee-based financial planner, or you could employ a broker who receives an asset management fee. Problem is most people are too big of cheap skates to pay a fee to a financial planner who will use their knowledge and expertise, much like any professional, to develop a financial plan for you and make recommendations based on that plan. Instead you get what you pay for, which is everybody wants free advice, so you end up with product pushers who will sell you what they think you want, that may or may not be the best fit for the rest of your portfolio.

Maybe Obama needs to work on the first step with most Americans which is to save ANYTHING for retirement. Or maybe how about this, the individual do a little research into what they are investing in, what the fees are, and the risk level of a particular investment. 1/3 of Americans have less than $1,000 saved for retirement? Can that be true? I swear, Americans are fricking dumb.

 

[L. Wade Childress]

The point isn't about some being good, or some being bad. These regulations are designed to make the financial advisor work for you first. To make them disclose if someone is giving them perks to steer you towards their products, and to force them to put your wants/needs first.

my point is that is it typically smaller advisors that avoid the fiduciary model because they are trying to build a book of business. you can't start a fee-based advisory business from scratch and also pay your bills. the problem is that the more established advisors are going to require a certain asset level to make it worth their time. so people with smaller asset levels tend to get stuck with less-credentialed, less experienced advisors who are running a transaction-oriented business (commission products rather than a percent of AUM or flat fee) so they can pay the bills.

most advisors aren't chosing the lower suitability standard to avoid fiduciary responsibility. they doing it so they can sell commission - based products and make a living. if you get an honest person, they will be looking out for your interest regardless of what regulatory standard they operate under.