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'Customer First' Fiduciary Duty Regulations for Retirement Plans Issued
Old 04-06-2016, 10:02 AM   #1
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'Customer First' Fiduciary Duty Regulations for Retirement Plans Issued

The Labor Department issued regulations requiring financial advisors to put their customers interests first with regard to retirement planning and 401(k) plans. Here is a excerpt from the linked New York Times article:

"The Labor Department, after years of battling Wall Street and the insurance industry, issued new regulations on Wednesday that will require financial advisors and brokers handling individual retirement and 401(k) accounts to act in the best interests of their clients."

Link: http://www.nytimes.com/2016/04/07/yo...sers.html?_r=0
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Old 04-06-2016, 10:59 AM   #2
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From another article on the new rules:

As part of the overhaul, DOL has also lengthened the compliance timeline under the rule to one year from the original eight months, Perez said, and “phased in the implementation so firms will have until Jan. 1, 2018” to come into full compliance.

<snort>
Oh, jeez, "it will take us til 2018 to figure out how to be fiduciaries". Um, yeah, the same standard that CFPs have required since forever. Buyer (still) beware the broker!
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Old 04-06-2016, 12:22 PM   #3
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Originally Posted by Sarah in SC View Post
From another article on the new rules:

As part of the overhaul, DOL has also lengthened the compliance timeline under the rule to one year from the original eight months, Perez said, and “phased in the implementation so firms will have until Jan. 1, 2018” to come into full compliance.

<snort>
Oh, jeez, "it will take us til 2018 to figure out how to be fiduciaries". Um, yeah, the same standard that CFPs have required since forever. Buyer (still) beware the broker!
How do you "phase in" a fiduciary standard? "Yes dear customer, I sort of will kind of try to put your interests ahead of mine. If you come back in 6 months, I will try even harder!"?

Isn't this the legislation that the industry was fighting with some ad that depicted Mr & Mrs Doe having a conversation about how these new rules mean that they can no longer go to their long time, trusted advisor "Sue" to help them with all this complicated financial stuff? They are all indignant that the gov't wants to interfere with the relationship they have with financial wizard "Sue".

I'm pretty sure they didn't mention that "Sue" was charging them 1% and putting them in dozens (to make it look sophisticated) of her company's expensive under-performing funds. All for something they could probably DIY and do better with near zero effort.

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Old 04-06-2016, 01:46 PM   #4
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The Labor Department? The DOL oversees financial advisors?

This would be like the Agriculture Dept creating the food pyramid. Oh, wait...
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Old 04-06-2016, 01:51 PM   #5
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The Dept of Labor does not oversee financial advisors, but it does have some oversight over retirement plans and savings. Here is a link to the DOL FAQ on this measure FAQs: Conflicts of Interest Rulemaking — Protect Your Savings — U.S. Department of Labor
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Old 04-06-2016, 02:15 PM   #6
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more nanny state foolishness.
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Old 04-06-2016, 02:21 PM   #7
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Originally Posted by ERD50 View Post
How do you "phase in" a fiduciary standard?
Without reading the details my guess is that the delay relates to training and perhaps testing requirements. Broker dealers already have to pass a series of tests and also have continuous "education" requirements (which mostly involves staring at a computer screen and pushing the "next page" button until you've scrolled through all the pages of material). It's possible that the new rules also have similar requirements attached but those requirements won't be enforced immediately.
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Old 04-06-2016, 02:25 PM   #8
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Let's not ruin the thread with political comments, please.
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Old 04-06-2016, 03:27 PM   #9
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Quote:
Originally Posted by jdmorton View Post
The Labor Department issued regulations requiring financial advisors to put their customers interests first with regard to retirement planning and 401(k) plans. Here is a excerpt from the linked New York Times article:

"The Labor Department, after years of battling Wall Street and the insurance industry, issued new regulations on Wednesday that will require financial advisors and brokers handling individual retirement and 401(k) accounts to act in the best interests of their clients."

Link: http://www.nytimes.com/2016/04/07/yo...sers.html?_r=0
Interesting read. I'm hoping that it still has an impact when put in force. There's a few items that would suggest a concern:

(From the article)
"Secretary Perez said that government rule makers had made several changes to their last proposal in an effort to respond to the criticism and avoid creating a bias toward certain investment products. He said advisers would not be obliged to sell lowest-cost products if a more expensive product like a variable annuity made sense for a particular individual’s situation."

I'm having a hard time understanding how "fiduciary" and "a variable annuity made sense" go together. But maybe that's just me.
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Old 04-06-2016, 03:31 PM   #10
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I'm having a hard time understanding how "fiduciary" and "a variable annuity made sense" go together. But maybe that's just me.
it's does make sense for certain individuals
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Old 04-06-2016, 03:37 PM   #11
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I'm having a hard time understanding how "fiduciary" and "a variable annuity made sense" go together. But maybe that's just me.
Quote:
Originally Posted by Big_Hitter View Post
it's does make sense for certain individuals
Like the sellers of variable annuities.
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Old 04-06-2016, 04:00 PM   #12
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A casual acquaintance is a broker and he was saying we should all say "good-bye" to no-fee IRA accounts. I think he was saying if they couldn't collect our money indirectly, they would start doing it directly. I didn't get into it with him as it was Happy Hour and he's my coworker's boyfriend, but I just thought, "pooh!"

I say it's about time they started being more transparent.
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Old 04-06-2016, 04:07 PM   #13
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A casual acquaintance is a broker and he was saying we should all say "good-bye" to no-fee IRA accounts.
That would surprise me. I doubt Vanguard, Fidelity, and the gazilion other fund companies are really going to stop offering no-fee IRAs because FAs now have fiduciary duties to their IRA clients.
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Old 04-06-2016, 04:14 PM   #14
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Originally Posted by GalaxyBoy View Post
A casual acquaintance is a broker and he was saying we should all say "good-bye" to no-fee IRA accounts. I think he was saying if they couldn't collect our money indirectly, they would start doing it directly. I didn't get into it with him as it was Happy Hour and he's my coworker's boyfriend, but I just thought, "pooh!"

I say it's about time they started being more transparent.
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Originally Posted by Gone4Good View Post
Are Vanguard, Fidelity, and the gazilion other fund companies really going to stop offering no-fee IRAs because brokers now have fiduciary duties to their clients.

I doubt that very much.
+1.

I think the relevant passage above is: "A casual acquaintance is a broker ... "

What's the saying? It's near impossible to convince someone of something, if that something challenges their livelihood?

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Old 04-06-2016, 04:21 PM   #15
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Originally Posted by GalaxyBoy View Post
A casual acquaintance is a broker and he was saying we should all say "good-bye" to no-fee IRA accounts. I think he was saying if they couldn't collect our money indirectly, they would start doing it directly. I didn't get into it with him as it was Happy Hour and he's my coworker's boyfriend, but I just thought, "pooh!"
I think what your casual acquaintance, the broker, meant was that we should all say goodbye to no-fee IRA accounts at the firm where he works. Fine. That's of no concern to me. I wasn't looking to establish an IRA with a firm that either wants to charge me for "advise" or for the privilege of having an IRA account with them.
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Old 04-06-2016, 04:29 PM   #16
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I think what your casual acquaintance, the broker, meant was that we should all say goodbye to no-fee IRA accounts at the firm where he works. Fine. That's of no concern to me. I wasn't looking to establish an IRA with a firm that either wants to charge me for "advise" or for the privilege of having an IRA account with them.
I'd go the next step further. I'm not looking to establish a relationship with a firm that will have to change it's business model if they're not allowed to sell me products against my best interest.
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Old 04-06-2016, 05:05 PM   #17
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Buyer (still) beware the broker!
Or anyone whose compensation is wholly or partially dependent on commissions collected from you when you make "investments" they've suggested.
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Old 04-06-2016, 05:24 PM   #18
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I eagerly await the flood of righteous indignation and the assorted paid editorials and speechifying about how putting the customer first is really bad for the customer.

So it goes, so it goes.
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Old 04-06-2016, 05:29 PM   #19
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How does the new rule handle clients that were sold financial crap that benefited the broker, do they have to call em up and tell them hope putrid it is?


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Old 04-06-2016, 06:50 PM   #20
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I think it might put some Market Timing Winged Monkeys outta work.
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