
Abandoning the fiduciary rule was a mistake - petethomas
https://www.bloomberg.com/opinion/articles/2019-05-06/trump-could-cost-future-retirees-billions
======
inflatableDodo
Estimated cost to the financial advice market (by the financial advice market)
of having to abide by the fiduciary rule - $2.4 billion

[https://www.investmentnews.com/article/20151230/FREE/1512399...](https://www.investmentnews.com/article/20151230/FREE/151239992/dol-
fiduciary-rule-could-take-2-4-billion-bite-out-of-financial)

Estimated cost over the next 30 years for retirees (by the Economic Policy
Institute), just from the fiduciary rule being delayed for 18 months - $10.9
billion

[https://www.epi.org/publication/another-fiduciary-rule-
delay...](https://www.epi.org/publication/another-fiduciary-rule-delay-would-
cost-retirement-savers-10-9-billion-over-30-years/)

This isn't even capitalism. This is like some John Frum cargo-cult version,
being acted out by people who have heard the word 'economics' but have at best
only absorbed that it is something to do with people who like money and
dressing in suits.

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village-idiot
Pretty much every neutral observer called that one, and quite a few non-
neutral ones too. There’s no rational way to justify allowing wealth managers
to sell their clients products that are contrary to the clients’ interests,
least of all under the laughable excuse of “customer choice”.

The only question is, exactly how corrupt was this? Was it “the boss is an
idiot and doesn’t understand”, or “they bought enough over priced hotel
rooms”?

~~~
qmanjamz
Most other industries are allowed to sell products that are contrary to their
clients' interests. I don't see why wealth management should be any different.
If my mechanic can try to sell me a bunch of services I don't really need
every time I go in for an oil change, I have no problem with the financial
industry doing the same.

~~~
village-idiot
The difference is that your mechanic isn’t acting as your agent with regards
to all things automotive, they represent the shop they work for. That
differentiation of who’s responsible for what makes a huge difference.

A financial advisor is much more akin to a lawyer, you pay them to represent
your interests. And it is absolutely against the rules for your lawyer to not
protect your best interests to the upmost extent of the law.

~~~
jimmydddd
Agreed. Standard lawyer jokes aside, I used to routinely advise clients
against filing lawsuits which would have benfitted me and my firm financially.
In many cases, it would have been a waste of time and money for the client.
I'm surprised that financial advisors think it's acceptable to advise against
a client's interests. Not surprised that they would do it, but surprised that
they publically state that there is nothing wrong with it.

~~~
village-idiot
I think high finance has deluded itself into thinking that they’re
irreplaceable, and therefore they don’t have to pay an ounce of attention to
their public image. In minor cases they might be right, but I think they’re
underestimating the risks of mass scale legislation or reorganization directly
caused by their malfeasance.

------
hguhghuff
It’s a mistake if you believe that the government acts or should act in the
interests of its citizens.

If however you think the governments purpose is to further the interests of
corporations, then it’s the opposite of a mistake.

~~~
PopeDotNinja
I once asked a friend, who works for a lesser known government agency, what
his agency does. He said that like any good bureaucracy, its first job was to
perpetuate itself. I found that statement both amusing and insightful.

~~~
todipa
You should definitively watch "Yes Minister" It is one of the funniest
political (timeless wisdom) shows that people have forgotten.

~~~
JetSpiegel
The Thick of It is more recent (Blair era), but it can be thought of as a
spiritual successor, and it has no laugh track.

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0n0n0m0uz
Mistake for who? The gutting of the consumer protection served the function
and constituency it was designed to.

~~~
rayiner
The rule was overturned by a federal court for overstepping the DOL’s
statutory authority. What “constituency” are those unelected, life-tenured
judges serving, exactly?

Maybe the rule is a good idea, or maybe it isn’t. But the Obama administration
tried to promulgate a massive new financial regulation through aggressive
interpretation of existing statutory authority. A federal court didn’t buy it.
That sometimes happens when you try to create new laws through executive
bureaucracy rather than Congress. (Ironically, exactly the same thing has
repeatedly happened to Trump.)

~~~
addicted
It was overturned in court because the current administration refused to
defend it.

It’s possible that even if they had genuinely defended the rule in court it
would have been overturned, but that’s not what happened and while technically
you are right, in reality, the decision was a political and not a judicial
decision.

~~~
rayiner
That is absolutely false. You can hear the hour long argument where the
government defended the rule here:
[http://www.ca5.uscourts.gov/OralArgRecordings/17/17-10238_7-...](http://www.ca5.uscourts.gov/OralArgRecordings/17/17-10238_7-31-2017.mp3).
The Fifth Circuit then rendered a decision on the merits. The government
didn’t file for rehearing or petition for Supreme Court review. But those are
discretionary forms of review, reserved for special circumstances, and rarely
result in overturning the appeals court decision.

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krob
Well, Trump administration is trying their best to muck things up as good as
they can. Then they can be blamed for the next major depression type recession
& costing the american public the welfare state of FDR.

------
diogenescynic
It’s going to take generations to fix what the Trump administration and
republicans like Mitch McConnell have done to this country. Never forget or
forgive these assholes.

~~~
yay_cloud2
Never forgetting or forgiving seems like an ineffective response. My entire
being yearns for more.

------
Jerry2
As a sidenote, anyone else noticed the heavy amount of browser fingerprinting
on Bloomberg sites? I have a few extensions that block browser fingerprinting
and whenever I go on Bloomberg sites, I get a bunch of warnings about canvas,
fonts etc fingerprinting. Then, I'm immediately redirected to a page where I
have to enter a recaptcha to view the page [0]. That page also states that
they've "detected unusual activity from your network" winch is a total lie
because if I disable those, I don't get a warning and get a paywall instead.

[0] [https://i.imgur.com/EEIcwK2.jpg](https://i.imgur.com/EEIcwK2.jpg)

~~~
crashedsnow
The whole of the internet is a patchwork of ad blockers and ad block
mitigations which come in the form of both aggressive JavaScript and the much-
more-insidious passive aggressive "sponsored content". Possible that this
fingerprinting is all in service of trying desperately to monetize.
Unfortunately we only have ourselves to blame.

------
rayiner
The very first sentence is quite misleading:

> Last year, the Trump administration abandoned a regulation designed to
> protect U.S. savers from conflicted investment advice.

That suggests that the Trump administration repealed the rule. What actually
happened is that a federal appeals court vacated the rule because it
overstepped the DOL’s statutory authority:
[https://images.thinkadvisor.com/contrib/content/uploads/docu...](https://images.thinkadvisor.com/contrib/content/uploads/documents/415/299631/5th-
Circuit_chamber-fiduciary-mandate.pdf). (Among other things, the DOL departed
from its own long-standing interpretation of a key statutory term.)

When the article says the Trump administration “abandoned” the rule, it means
that the administration declined to seek rehearing—basically, asking the
appeals court to change its mind—or Supreme Court review. Of course, both of
those options are long shots. A federal court of appeals decision in a case is
almost always the last word. Further review is discretionary, and rare. That
is especially true in a case like this one. The prerequisite for rehearing or
Supreme Court review is typically a case of “exceptional importance” or where
there are conflicting decisions among the courts of appeals for the different
circuits. An esoteric financial regulation doesn’t fit either criteria.

------
Zarath
I'll play a bit of devil's advocate here: Was it though? Financial advisors
were always mostly a ripoff for people with basic financial literacy who
aren't trying to do crazy tax stuff or laddering CDs or something. If
anything, this should just accelerate the switch to index funds.

~~~
modriano
Even if financial advisors were always an inferior option than index funds,
why should they be allowed to make financial decisions for their clients that
are contrary to the best interests of their clients?

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mnm1
> To be clear, there are upstanding insurers and agents who sell indexed
> annuities only when appropriate.

There were. Now investors simply cannot tell the difference so for all intents
and purposes, there are not. If you're investing through a third party at this
point, you're a fool and you'll be taken advantage of. There is no protection
other than the law. This article and others should make that clear. Investors
need to become experts themselves and learn about what they invest in as well
as how to invest. It's a tall order but that's what it takes to not get ripped
off now. That's what this administration wanted and that's what they got: a
clear path to ripping people off on their retirement savings. What else would
one expect from them?

~~~
loeg
If you advertise you're a fiduciary, you still have a fiduciary duty to
customers. Most "retirement planners" or "advisors" (e.g., Edward Jones'
franchises) do not advertise a fiduciary duty.

As a consumer, you may have to pay more up front to find a fiduciary-duty
adviser, but that is money well spent and quickly pays for itself.

