Our ability to service our clients could be greatly diminished by April 2017. The Department of Labor (DOL) released in April of this year new regulations that will limit consumer choices and create more ambiguity. If you have plans to move your money from one financial institution to another financial institution, it would be wise to have this complete soon. Your ability to do with your money as you please could be in jeopardy. This will cause most financial advisors to go out of business.
It is unclear how our industry will go forward after the DOL regulation is officially in place. The motive for the regulation seems benign and beneficial, much like the “Affordable Health Care Act” was sold. Do you remember when Barack Obama said, “If you like your doctor, you will be able to keep your doctor. Period. If you like your health care plan, you will be able to keep your health care plan. Period. No one will take it away. No matter what.” June 15, 2009.
And, “We agree on reforms that will finally reduce the costs of health care. Families will save on their premiums…” President Obama June 15, 2009.
Everyone today knows both of these statements were blatant mistruths. My dad and mom are paying over $2,000 per month for their health insurance and they have no health problems.
My wife and I recently needed to purchase health insurance. I made several calls to different companies to try to figure out how to buy health insurance. In the past it has taken less than half an hour to buy a health insurance policy. I spent several hours making calls. I stopped at a local Blue Cross office and luckily the former salesman told us what we needed to do after we explained our situation. I asked if he could sell us the plan. He replied that he could not, because he no longer made money by selling health insurance. He was still coming to his office to service his old clients. The sticker shock of what the insurance plan costs nearly sent me into convulsions. We have no health issues and it costs us $868 per month. What’s crazier is that our provider has requested a twenty percent increase for next year.
Did health insurance become more affordable? Did the law help create jobs?
The president is leaving no rock untouched in his apparent plot to destroy America. On February 23, 2015 he said, “Today, I'm calling on the Department of Labor to update the rules and requirements that retirement advisors put the best interests of their clients above their own financial interests. It's a very simple principle: You want to give financial advice, you've got to put your client's interests first.”
This statement, just like the above statements, is filled with half-truths and misstatements. The Department of Labor fiduciary ruling again is being sold as a win for the consumer like Obamacare, but it is widely believed that the cost for compliance will drive most retirement advisors out of the business. Or at best they will not be able to service smaller accounts due to the liability and cost to comply with the arduous regulations. The DOL admits that it has no way to enforce the new rules, but will depend on “personal injury” type lawyers to bring lawsuits when it’s believed that someone who was giving financial advice violated a rule. In essence, advisors who may be innocent will be forced to retain legal assistance to defend themselves.
My dad has been in the financial services business since the year I was born. Ensuring that every client’s best interests are served has always been the guiding principle of our firm’s 32-year history. After being heavily recruited, my dad finally succumbed to going to work for one of the most popular investment brokerage firms in our area and in the nation. For 18 months he slogged through the dread of having to fight internal auditors over why he was not selling the firm’s priority mutual funds. He was doing the right thing by his clients, he believed, but it didn’t profit the brokerage house to the extent that they wanted so he was scrutinized for doing the right thing.
Because most chain brokerage companies have made large profits from selling their specially designed blends of mutual funds that are high in all types of fees, most have deep pockets. The kickbacks from these schemes are enormous, and individual consumers have no idea because they don’t read the legalese in the prospectus. With that being said, the chains and bank brokerage companies will be most able to fight the trial attorneys who will accuse them of providing bad advice.
We believe this is one more step in the direction of nationalizing retirement accounts and putting the government in charge of more of our lives. When a bureaucrat can arbitrarily declare that an advisor has not had your best interests in mind, it limits your ability to decide for yourself what is best.
We are committed to being there for our clients for the long haul, and our desire is to continue to warn you about pitfalls we see coming. Also, we remain committed to our goals for our clients, which are to avoid losing money, to create consistency and stability no matter what, and to always put the client’s interests first.