News & Insights

Breaking: Brokers Line Their Own Pockets at the Expense of Investors … Still

by Elliot Weissbluth on June 06, 2014

News of the Department of Labor once again delaying an expansion of the fiduciary rule broke Friday morning.

For those of you not up to speed on proposed government regulations, the takeaway is this: financial professionals who collect a fee on employee benefit plans are under no obligation not to take advantage of you, as long as they can argue their investment advice is “suitable.”

Or that they only gave you advice one time (I’m still not sure I understand the logic of that exception).

Or they can fit through other loopholes that allow them to avoid putting the client’s interest first.

In the immortal words of David Byrne, same as it ever was.

After four years, the Labor Department joins the whole Dodd-Frank circus, the Swiss cheesing of the Volcker rule, and an oddly quiet SEC in refusing to advocate for the simple idea of putting the client’s interest first.

The rather bizarre argument that brokers would lose money by giving investors better advice—because brokers would lose their commissions on certain questionable products—is remarkable. The newfound industry “concern” for low- and middle-income investors, who brokers claim won’t have access to any financial advice if the fiduciary rule is expanded, is laughable.

Investors still don’t understand the difference between “suitable” brokers and fiduciary advisors. But, just like the arguments about cigarette smoking and health concerns, eventually, the truth will come out.

And when it does, those of us who are already fiduciaries working for firms that do not have embedded economic conflicts of interest will continue putting our client’s interests first, same as it ever was.

This post originally appeared on LinkedIn.  

https://www.linkedin.com/pulse/20140616135152-6126609-breaking-brokers-line-their-own-pockets-screw-investors-still/

# Advice Department of Labor Dodd-Frank Fiduciary SEC Volcker Rule

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