Washington Republicans want to kill conflict-of-interest rule, say it will harm retirement savers

[jpak]

Source: Cleveland.com

WASHINGTON -- Congressional Republicans drew clear lines this week in a matter that could affect millions of retirement savers: whether to require financial pros to give advice that is free from conflicts of interest.

Senate Republicans introduced legislation to kill that requirement, with a majority of GOP senators signing on. They said that the rule will backfire, scaring small employers and some financial firms from giving to advice to workers and future retirees with meager nest eggs.

Ohio Republican Sen. Rob Portman did not join them, but he previously expressed concern that the conflict-of-interest rule could hurt small savers. His office reiterated that position to cleveland.com today.

Much of this week's action is symbolic, and the White House could veto the legislation easily. Yet the positions of some senators, including Portman, make them certain to be attacked as siding with Wall Street sharks. A similar line of criticism was launched this week on an Illinois colleague.

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Read more: http://www.cleveland.com/open/index.ssf/2016/04/washington_republicans_want_to.html

[The Green Manalishi]

1. Fee based is the only way to go

Even with my tiny nest egg, a few hundred dollars paid to someone for unbiased advice is a damned good investment. Anyone with more than 5 or 10 thousand in long term retirement savings should either be pretty well self educated or pay for the impartial services of an expert who doesn't stand to gain based on you investing an any specific financial instrument.

[forest444]

2. I'm with you.

I learned that the hard way some years back. Some things really are best left to the professionals.

[Yupster]

11. In most cases I disagree with you

An annual percentage will make the broker richer and it make life easier for the regulators. I'm not convinced it's best for most investors. There's a lot to be said for buying 100 shares of some dividend paying stocks and keeping them for years without paying anything year to year. Same thing with municipal bonds. Why pay someone to watch a muni bond that sits there, minds its own business and pays a dividend twice a year.

[The Green Manalishi]

12. What I mean is paying an expert to tell you what to invest in

That is what 'fee based' means, generally.

The alternative is what is being discussed in the OP; where you do not directly pay the advisor but they are instead remunerated by what you buy; that is what the proposed regulations address, but still conflict of interest. I believe in paying for expertise. Some folks are shortsited and say "How am I supposed to pay $500 (or whatever amount) for just advice, but in the plans being regulated you don't have to pay directly but you know the financial advisors make their money somehow.

[Yupster]

14. Most brokerage firms are moving toward fee based investment plans

to comply with these types of regulations.

The broker doesn't make a commission. Instead the customer pays an annual fee, usually about 1.5 % a year. What the customer gets is a package of mutual funds or stocks and bonds put together by the experts at the home office. They used to call them wrap accounts. Now each company has their own fancy name for their program.

The regulators like them because it standardizes things. The brokers love them because it increases their pay dramatically.

The companies are moving to them because it complies with the government's desire that the broker doesn't have a financial interest of recommending one investment over another. No matter which financial instruments are in your plan, the broker makes the same.

Currently if you buy a CD, a stock, a mutual fund, or a bond the broker gets a different commission. Easy solution. Charge every one the same much larger cost. Everyone's satisfied.

[The Green Manalishi]

15. I merely asked my advisor what to buy

No conflict of interest.

Actually had him review my financial plan and look for flaws or upgrades.

[Yupster]

16. So what do you do when you have a bond come due

or if you should sell a stock?

Do you do the research on your own? Do you go to your adviser every few weeks and pay him again?

[The Green Manalishi]

17. It varies.

Sometimes I just email them, simple question; mostly we've planned such things out with their help a few years at a time.

I'm only 54. so thinking 20-25 years timeframe (no intention of retiring until at LEAST 70, love my job, come from long lived stock and am in good health).

Just my point is that the more unbiased advice (assuming the same level of competence) the better. And all the advice in the world is of little use if one doesn't research and understand.

[Yupster]

21. But how do you buy the bond?

Do you buys bonds on your own?

[The Green Manalishi]

24. Yes.

A couple of different ways.

If you belong to a Credit Union they can offer brokerage services for a reasonable price often.

[Yupster]

27. Then you're right back to the same thing

The broker at the Credit Union makes a commission selling you that bond.

I don't have any problem with that.

My problem is calling someone when a bond comes due and asking what should I do? He charges you $ 50 for the phone call and tells you to buy another bond. Then you go to a broker and buy the bond.

Why not just go to a broker you trust and he'll sell you the bond without the middleman?

When your toilet is slow do you call a plumber to ask him what's wrong and then call a different plumber to fix it?

[The Green Manalishi]

29. I see what you are saying, but

What works well for me is separating the advice from the sales. There are plenty of ways to buy investments, and everyone is going make some kind of commission. What I think is better is to have a financial expert look at my strategy and what I should do to optimize what I'm able to set aside, and pay her a fee for her expertise, and decouple that from the person who sells me the financial instrument. If the plumber, in your example, had a vested interest in selling me one particular kind of toilet then yes, I might well ask one person for the diagnosis and another to install it (or, perhaps more accurately, and this is exactly what I've done with stuff around my house, pay someone for their expertise and/design and then do the job myself) . In my situation, I want strategic, long term advice regarding my mix of investments, and I like educating myself; I'll agree if all someone wants to do is 'one stop shopping' then find a broker you trust.

With financial planning and investment, IMHO, most of the time doing ANYTHING is better than doing nothing. I'm always amazed at the people who can afford a cell phone and data plan for $90 a month and spend $85 a month for TV but can't put away $100 a month into a mutual fund; well, 'amazed' might be the wrong word....

Fundamentally it comes down to educating yourself and then doing what you are comfortable doing, doesn't it? I've known people who have done well just going to one broker and putting their entire trust in them, and others who have seemingly educated themselves and been proactive and still gotten screwed.... I kind of like the planning aspect, and view the Financial advisor sort of like hiring an architect to design and advise and then building the structure myself, other people not so much

[1939]

22. Unless it is a muni bond from some place like Detroit

Muni bonds don't just sit there either. Many high rate munis got called long before maturity as interest rates dropped meaning they had to go out and find replacements (and "good" munis are hard to find right now).

[DiverDave]

13. obfuscation

This isn't about FREE advice.
it's about greed and theft.
way to back the rich THIEVES.
Are you sure you are on the right website?

[The Green Manalishi]

18. I don't understand what you mean. And no need for insults.

There *SHOULD* be a requirement than financial advisors disclose their own self interest when directing investments. The Rethuglicans are against this. My point is that one will do better with an independent financial advisor who has no financial interest in the advice they give you in terms of getting a commission. Why are you being an asshole to me? Show me ANYWHERE I am 'backing rich thieves' or apologize. The simple fact is that regulations or no, it is better to pay upfront for unbiased advice than to put your nest egg in the hands of someone who might very well have motivations for putting you into specific investments.

[DiverDave]

19. Man, you don't get the rule change

If a financial advisor has 2 investments one that pays him more ,OF MY MONEY, and another that pays him less, he was under NO OBLIGATION
to inform me of the choice.

By saying that the rule, somehow, is bad you are saying that it should be OK that my advisor is ripping me off.
Apologize? Nah. And don't Pm me again...

[The Green Manalishi]

20. Your comprehension sucks

Read much?

In addition to being a rude twit you seem to be an idiot.

From my post : "few hundred dollars paid to someone for unbiased advice is a damned good investment"..

If you were able to read, difficult since you seem to have your head up your ass, you'd see that I was suggesting that ONLY a fee based, not a commission based relationship with a financial advisor, in other words REGARDLESS of the rule or changes thereunto, is the most sure course.

And, if you understood English you would see that "Anyone with more than 5 or 10 thousand in long term retirement savings should either be pretty well self educated or pay for the impartial services of an expert who doesn't stand to gain based on you investing an any specific financial instrument." has nothing to do with that the rule is good or bad.

Welcome to my ignore list, moron.

[1939]

23. One thing that i have learned over the course of my life

If the broker or salesman describes an investment as a "product" immediately put your hand over your wallet to keep his out.

I buy stocks and bonds based on my thoughts and research and use the broker as a sanity check. It has worked pretty well and my retirement nest egg has added up.

One technique that i used for savings was a hard and fast rule that half of every salary increase (promotion, longevity, or cost of living) was immediately sequestered into savings and investment. Now that I am 77, it has added up over the years.

[2naSalit]

3. The new ripoff market

legally approved.

[Wellstone ruled]

7. Nailed it!!!!

Lets pull back the curtain on this thing. This is all part and parcel of Black Rocks replacement plan for Social Security and the 401 k and IRA's. It is called a vested Annuity which can be moved from Employer to Employer. Just another shot at capturing the 54 trillion Social Security Bond fund.

And to think Fink is a advisor to a certain Campaign.

[athenasatanjesus]

4. Vote us into government because government cannot work...

That's a conflict of interest since once elected they benefit politically every time the government doesn't work.

[PSPS]

5. The standard US business model in three words: Lie, cheat, steal.

[RoccoR5955]

6. Whose retirement savers?

Their's?

[underpants]

8. Not just the Repubs but HOW BLATANT CAN YOU BE???

These people, the whole industry and their paid supporters, are openly publicly saying WE SHOULD BE ABLE TO RIP YOU OFF!

[Lucky Luciano]

9. You left out the full headline

Washington Republicans want to kill conflict-of-interest rule, say it will harm retirement savers' brokers.

[Uben]

10. If a republican said it, it's a lie!

That's all the bastards do is lie. WHy don't they pass a law that says if you get caught flagrantly lying to the public, you lose your job?
Hmmm? I guess there wouldn't be a republican party if they did! My bad.

[sendero]

25. This is typical republicanism..

... they claim they worry about small savers but their real concern is for profits being made by steering people into high-load products.

Fuck them as usual.

[2naSalit]

26. Really no big surprise since they practice

conflict of interest on a daily basis.