Everything that I have read on it is its nice to see but very hard to enforce. Similar to a realtor being a fiduciary, good on paper, impossible to enforce.

Speaking to a friend who's father is an FA, I know the guy was a strong advocate for a fiduciary rule, basically just said its going to be a ton of extra paperwork for him.

I've read the rule and implementation guides at my company and still don't see how it changes anything. As a member of SIPC, you are supposed to have the best interest of your customers in mind when you recommend an investment product. That gets really grey and in the eye of the beholder. Without some sort of metric and decision gram it is a subjective argument. I'm not going to say I fell victim to bad investment advice when I opened my first Roth IRA at 21, but the advice turned bad. The guy pushed two products on me and for 6 months, that thing churned with a return of almost 50%, then the dot com bust happened and became next to worthless. Did he give me bad advice? Well as it turns out the expense ratio on this product was higher than average. And being all stock with technology, one might say it was high risk. But did he violate a fiduciary responsibility? If so, I would have been eligible for SIPC reimbursement, but you see, this was a common practice back then and I guarantee pushing higher commission items is still a common practice. I would think without a metric, or a company designing one that its employees must follow, it is entirely subjective and impossible to enforce.

This is the problem I have with Warren and her pet project the CRPB. See, this instance, could have easily resulted in frivolous complaints that could have unnecessary consequences for companies. In my case, I do not believe I was a victim of poor advice. Afterall, my investment increased 50% in 6 months. While normal at the time, that would be an awesome return now. As a college student in Accounting and having taken several classes in finance and accounting, I was aware that bigger returns come with risk. I read the materials and the expense ratios were clearly disclosed, penalties and investments the thing made disclosed as well. Doesn't matter the guy pushed it on me. He simply saw an opportunity to sell a high commission item to a willing buyer. Had I sold it within 6 months, I would have certainly incurred a penalty, but nowhere near the loss after the .com crash. When it started losing money, I did ask what I should do, and was told to hold it. He gained nothing from that, and in fact gave me advice that was on nearly every day trading talking head show on CNBC at the time.

The only areas that I could see this working, and believe its original intention was for sales to the elderly. They so often are corralled into seminars where they experience high pressure sales into annuities with high expense ratios and high commissions for the sellers. In such cases, the buyer isn't presented option, but simply given limited information to make a decision on. Not the case with most brokers, even if they are pushing something on you.

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"In the world I see you are stalking elk through the damp canyon forests around the ruins of Rockefeller Center. You'll wear leather clothes that will last you the rest of your life. You'll climb the wrist-thick kudzu vines that wrap the Sears Towers. And when you look down, you'll see tiny figures pounding corn, laying stripes of venison on the empty car pool lane of some abandoned superhighway." T Durden

Well, you're not handing your life savings, that you will depend on to retire, to a car salesman. Some people are, to a Financial Advisor, who they THINK has their best interests in mind.

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"Honestly, triathlon is a pussified version of duathlon on that final run."- Desert Dude

That's a lot of words, but that's my take on it as well. Does the benefit outweigh the cost of enforcement, and how rigidly can it be enforced? This seems like the type of grey area rule that's terribly hard to monitor and enforce, and more often than not it'll be a he-said, she-said court battle...more money tied up in lawyers and courts and regulators and less money in peoples pockets. Fuck that, let people know to shop around and be wary of advice, do their own research and don't trust everything the 'pros' tell them.

"The only areas that I could see this working, and believe its original intention was for sales to the elderly. They so often are corralled into seminars where they experience high pressure sales into annuities with high expense ratios and high commissions for the sellers. In such cases, the buyer isn't presented option, but simply given limited information to make a decision on. Not the case with most brokers, even if they are pushing something on you."

This alone should be enough to want this law, right? Bad enough ripping off young people...

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"Honestly, triathlon is a pussified version of duathlon on that final run."- Desert Dude

What exactly is the DOL ruling going to fix ? It is just adding more over sight to an overly regulated industry. If you are working with an FA who does not have a fiduciary responsibility to you then you are working with the wrong FA. It only covers retirement accounts. You can use the BIC to go around it. Unscrupulous people in the financial industry are going to do bad things regardless of the DOL ruling. What it most likely will do will run more good people out of the industry and drive the bad operators to go out on their own and continue to be bad operators.

Con: If FA's are greedy commission (or fee) hungry people with no interest in their clients other then to make a buck. Then you have given them a reason to go out and charge more because now they have an excuse to do so with retirement accounts.


Then you are working with the wrong people. It should be clear and they should explain it to you.

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"I think I've cracked the code. double letters are cheaters except for perfect squares (a, d, i, p and y). So Leddy isn't a cheater... "

Look up crash proof retirement, Phil Canela complaints. It's what you quoted to a tee. Then tell me how the DOL ruling is going to stop people like him

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"I think I've cracked the code. double letters are cheaters except for perfect squares (a, d, i, p and y). So Leddy isn't a cheater... "

I totally agree. However, some rule should be put in place to put a solid 2/3 of the mutual funds out of business. They serve no real purpose other than to enrich the companies and managers that manage them. They absolutely and without a doubt do not deliver value in excess of their management fees (as expressed by the expense ratio). So why do they exist? Because people are stupid and there is no rule against it. Plain and simple.

American Funds, Oppenheimer, Voya, Edward Jones - pretty much all utter garbage.

Don't even get me started on insurance companies that try to sell variable interest annuities etc.

This isn't really about choice and shopping around or whatever other free market BS we want to use to justify the existence of some of these scumbags. It's about protecting corporate profits and lobbying dollars. I'd say a solid 90% of the players in the 403(b) market are legally fleecing their customers.

I don't really care if this rule goes through because I won't let some asshole FA screw me or my closest family/friends. I also don't think that legitimate players like Vanguard or Fidelity really need to do more paperwork to justify their products. I do believe that the majority of uninformed investors and retirement savers (read: almost everyone) would benefit from some legislation that would kill the worst offenders. Because that's what they deserve for the "work" they do.

Amen. Try suing the FA after he/she has made some of the dumbest investments ever with your cash. You could say this is simply a case of buyer beware, but that kind of attitude got us to the housing crash. People need protection. I hate to write that because it makes adults seem like simpletons but many people don't read contracts nor fine print. They hand over money to someone they "trust" and when things go south they are screwed. I wish an investing course was mandatory in all high-schools.

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"The great pleasure in life is doing what people say you cannot do."

SIPC wouldn't cover that ? You would have to file a complaint and go to arbitration to resolve an issue like that. The firm would pay. SIPC covers your account if the institution fails or if that guy stole from your account.

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"I think I've cracked the code. double letters are cheaters except for perfect squares (a, d, i, p and y). So Leddy isn't a cheater... "

The changes to meet new regulatory standards has to be met at the firm level, not the adviser level. Individual bad guys who do bad things will always be difficult and costly. You cannot regulate that away. That was not the intent.

The most tangible benefit to the consumer will be the elimination of some bad products. In fact a lot of that has already taken place. This was pointed out in a different thread but there is no scenario where a B share mutual fund class makes sense. The way the rule is being implemented doesn't mean that an adviser who sells a B share will get in trouble, it means the firm he works for will eliminate the sales of B shares all together.

I simplified it for the sake of explanation.

I think rules in place prior to this already addressed gross negligence and malfeasance by brokers. This rule was intended for obvious get rich schemes and those who take advantage of the elderly but even they were already covered by fraud laws or contract law. Now it has created a lot of needless exercise and compliance for companies with little in the way of impact on day to day broker/client deals.

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"In the world I see you are stalking elk through the damp canyon forests around the ruins of Rockefeller Center. You'll wear leather clothes that will last you the rest of your life. You'll climb the wrist-thick kudzu vines that wrap the Sears Towers. And when you look down, you'll see tiny figures pounding corn, laying stripes of venison on the empty car pool lane of some abandoned superhighway." T Durden

This is my market place. The problem exists here because there is typically no employer match so the incentive to contribute is low. SO these plans have to be sold to consumers typically in $100/200 mo increments. You want to take an application to a client for $5 per month commission? Me neither.

It was me he was quoting, and like I said, there are already rules in place to address fraud, gross negligence and malfeasance. I don't know this law does anymore to address this issue without some objective benchmark for what constitutes fiduciary responsibility. Otherwise it is just another law, with compliance rules that banks have to report to another agency.

In other words, it is another example of politicians saying "look, we did something" even if it doesn't do anything or just creates another layer of cost for companies.

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"In the world I see you are stalking elk through the damp canyon forests around the ruins of Rockefeller Center. You'll wear leather clothes that will last you the rest of your life. You'll climb the wrist-thick kudzu vines that wrap the Sears Towers. And when you look down, you'll see tiny figures pounding corn, laying stripes of venison on the empty car pool lane of some abandoned superhighway." T Durden

I'm personally torn a bit on this one, because I don't believe laws designed to "increase the trust in our financial institutions" are necessarily a good idea.
We Americans are too trusting as it is. We need to learn how to properly distrust.

And somehow the low commission places DO exist...but they're hard to find. My wife is a public school teacher with access to a 403(b). Most of her colleagues ignore it wholesale for the reason you cited...and the fact that they have a proper pension. That, however, is not that great either since it takes 10 years to vest at all and have to work pretty much an entire career before you accumulate a benefit that will sustain you. I'm not interested in working that long so I took up the 403(b) challenge and called everyone on the district's list. What a bunch of sleazebags.

Finally found one that charges $3.33/month + 0.15% of AUM. Not bad. Stuck it all into VTSAX and maxed out thereafter. Still much much lower than even the cheapest actively managed fund.

BTW: 403b plans were exempted from the fiduciary standards rule (that may or may not get implemented anyway)