As if you do not need another reason since most financial
advisors underperformed the stock market(s) last year by quite a bit, and they
still collected their fees.
In the news from the Labor Department is that after fighting
with the industry for a long time they are pushing forward on something called
the ‘fiduciary duty rule’. I do not know
what is worse, that the rule is necessary or that the industry is fighting both
the rule and any publicity. Here’s why:
Financial advisors for families or individuals planning
their investments and particularly retirement have an opportunity to earn fees
from the investment funds they steer their clients towards. This was, back in the day, called kickbacks.
In many business activities it is flat out illegal. For independent financial advisors it has not
only been common practice, but seldom revealed to the customer.
In the grand scheme of outrage, there are many financial activities
which are probably worse (think about how congressmen do their investing) but
the scale and scope of financial advisory services which exploit the ignorance
of savers has the potential to be the biggest of all.
In the era of index funds, and transparent advisory services
at the funds it is time to wake up the public.
No wonder ‘they’ are trying to keep it as quiet as possible.
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