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.

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

HighTower Advisors is registered with HighTower Securities, LLC, member FINRA and SIPC, and with HighTower Advisors, LLC, a registered investment advisor with the SEC. Securities are offered through HighTower Securities, LLC; advisory services are offered through HighTower Advisors, LLC.

This is not an offer to buy or sell securities. No investment process is free of risk, and there is no guarantee that the investment process or the investment opportunities referenced herein will be profitable. Past performance is not indicative of current or future performance and is not a guarantee. The investment opportunities referenced herein may not be suitable for all investors.

All data and information reference herein are from sources believed to be reliable. Any opinions, news, research, analyses, prices, or other information contained in this research is provided as general market commentary, it does not constitute investment advice. The team and HighTower shall not in any way be liable for claims, and make no expressed or implied representations or warranties as to the accuracy or completeness of the data and other information, or for statements or errors contained in or omissions from the obtained data and information referenced herein. The data and information are provided as of the date referenced. Such data and information are subject to change without notice.

This document was created for informational purposes only; the opinions expressed are solely those of the team and do not represent those of HighTower Advisors, LLC, or any of its affiliates.