b&b93 The govt is requiring advisors to have your best interests in mind, and people are mad about it: The New Fiduciary Rule
Today on Brunch & Budget on Bondfire Radio, Dyalekt and I going to talk about something I feel very strongly about, something I’m appalled has actually caused controversy. We talk a lot on the show about how important it is to make sure your advisor has committed to being your fiduciary, which basically means they have your best interests in mind. That should be a given right?????
Unfortunately, as it stands right now, many advisors are only required to make sure the productsthey sell you pass the suitability test, which means as long as it meets your goals and risk tolerance, they can present a more expensive product to you as long as they give you disclosures about fees and have no obligation to tell you about the better option. YES, this how it is right now.
The Dept of Labor is proposing a bill that will expand fiduciary rules to include retirement accounts (401ks, IRA’s, pensions, etc.) and also expand the definition to include anyone who gives individualized financial advice and is compensated for it in any way.
TRANSLATION PART 1: Brokers will only be allowed to show clients investments that are in line with the clients’ best interest and be forced to have the client sign a “best interest contract” if they are showing the client a product where they receive a commission.
TRANSLATION PART 2: Anyone calling themselves a financial expert and giving individualized advice (including the Dave Ramsey’s and Suze Orman’s of the world) and being compensated for it in ANY WAY (i.e. book sales, affiliate links, referral fees) even if the advice they give directly to the client is free, will be subject to a fiduciary standard. They can’t give bad advice with no consequences.
Tell me why people are mad about it. Tell me why people are saying it’s a violation of free speech. Tell me why Paul Ryan is saying it’s going to shut out the middle class from investment advice (http://www.speaker.gov/general/one-rule-could-hurt-millions-middle-class-savers).
Because this sounds like fear mongering to me.
Take a listen to get all the ranty details.
(also thanks to GoldBean founder/CEO Jane Barratt for telling us it’s time to take the “douche” out of fiduciary.)