Dear Santa:
It's probably too late, but I would love some common sense to be exercised in 2017. If you have any clout with our government, you could do a lot of good in this regard.
You see, a bunch of years ago, the Securities and Exchange Commission was charged by statute with creating a universal standard for my business — the securities business — that would require that retail financial advisors act only in the best interest of their clients. I know that it sounds like that should already be true, but it's not.
It seems beyond obvious to me that financial advisors should not be the only professionals (among doctors, attorneys, architects, accountants and the like) who don't have to put the interests of their clients first. Unfortunately, Santa, the SEC didn't do the job it was charged by law to do. Apparently, there's no penalty for that when you're part of the government.
When the SEC sat on its hands, the Department of Labor decided to get involved. The DOL didn't (and doesn't) have authority over the whole industry; that's the SEC's job. But it arguably (although not clearly) has authority over retirement savings in general.
So, with respect to retirement savings, the DOL proposed a regulatory rule whereby advisors would have to act in their clients' best interest when they are giving advice and acting on that advice with respect to retirement assets. This proposal was supported by pretty much every consumer group (again, the idea that financial advisors shouldn't have to act in their clients' best interest is silly).
But my industry generally screamed bloody murder and opposed it at every turn. The major exception was that part of the business that already acted exclusively as fiduciaries — those who did not ever act as part of a broker-dealer but acted entirely within the structure of a Registered Investment Adviser. The RIA-only world generally supported the proposal, which made sense to me, but didn't care about or comment upon its inherent flaws, because those flaws pretty much pertained only to the BD world.
Those inherent flaws may explain a bit of the opposition to the DOL rule. For example, the new rule provides that there are wholly different and separate requisite standards of conduct dependent upon whether the advisor is dealing with retirement assets or not.
But those flaws don't explain a lot of the opposition to the rule then and now, I don't think, though I hope I'm wrong there. You have a better sense than I do as to who is naughty and who is nice, Santa, so I'll leave that analysis to you.
In any event, that version of the new rule went through the necessary bureaucratic hoops over a lengthy period before the DOL pulled it — largely based upon apparent assurances from the SEC that it would finally do what it was supposed to have done all along.
After another couple years of silence from the SEC, the DOL got involved again and made another rule proposal. It was similar to the first one with some enhancements based upon what had been learned the first time around.
But some of the inherent flaws remained, including the two-tier standard of care. Once again, my industry — or at least the BD world — was largely unilaterally and unequivocally opposed to it.
