Financial News

[bigruss]

how many of these "financial professionals" are just salesmen recommending high fee funds that just happen to help their bottom line the most?

 

this appears to be a "study" by a lobbying group for the financial professionals/salesmen whose profits would be negatively impacted by the rule and that piece is written by the guy in charge of the lobbying group, so maybe take his conclusions with a grain of salt.

I work for a Financial investment mutual company now, I honestly wouldn't trust these guys without laws in place that make them specifically call out investments that make them more money. Way too much incentive to screw people over, I just think of the mortgage crisis and how brokers were pushing variable rates because they made 5x as much on them, why wouldn't these guys sell do something similar?

[southsider2k5]

yeah but my underlying point is questioning how worthwhile that "advice" even is in the first place. you could do a heck of a lot worse than just dumping everything into a low-cost Fidelity/Vanguard target date fund or other low-cost products, and a lot of the products offered by broker-dealer 'financial professionals' are great for the b-d's but not so great for the investors.

 

I can't go buy a sack of dog s*** at the grocery store after being "advised" by the grocery store's in-house Dog s*** Professional, but I'm okay with not having that advice or that choice.

 

If you are OK with less information and choices for consumers, that's good, because this is exactly what is going to happen. Retirees aren't going to be able to ask anyone about complicated tax and investing questions such as the IRS rules for forced divesting. You think the average 70 year old knows that or is comfortable going to the internet to find it? The unintended consequences here are going to be really bad for some people.

[Balta1701]

If you are OK with less information and choices for consumers, that's good, because this is exactly what is going to happen. Retirees aren't going to be able to ask anyone about complicated tax and investing questions such as the IRS rules for forced divesting. You think the average 70 year old knows that or is comfortable going to the internet to find it? The unintended consequences here are going to be really bad for some people.

Do consumers have information when they are being pitched a product that the seller has a financial stake in?

[StrangeSox]

If you are OK with less information and choices for consumers, that's good, because this is exactly what is going to happen. Retirees aren't going to be able to ask anyone about complicated tax and investing questions such as the IRS rules for forced divesting. You think the average 70 year old knows that or is comfortable going to the internet to find it? The unintended consequences here are going to be really bad for some people.

 

CPA's and financial advisers still exist. They just won't have as easy of a time finding someone holding themselves out as a "financial professional" who's really a salesman.

[Balta1701]

CPA's and financial advisers still exist. They just won't have as easy of a time finding someone holding themselves out as a "financial professional" who's really a salesman.

It certainly is likely that there would be fewer choices if salespeople couldn't pitch stocks they have a financial interest in, but I question the claim that is "less information for consumers" when the alternative is more options and less information about them.

[southsider2k5]

CPA's and financial advisers still exist. They just won't have as easy of a time finding someone holding themselves out as a "financial professional" who's really a salesman.

 

This is all about financial advisors.

[southsider2k5]

Do consumers have information when they are being pitched a product that the seller has a financial stake in?

 

99.9% of what these people do has nothing to do with the latter, especially in the lesser net worth of investors.

[StrangeSox]

This is all about financial advisors.

 

Actual, certified financial advisors with a fiduciary duty to avoid conflicts of interest or financial "advisors" in the same sense that the guy down at the dealership is an automotive "advisor" who puts his bottom line ahead of mine?

 

Is your personal money invested with one of these "advisors?" What sort of fees are you paying for their advice?

Edited September 8, 2017 by StrangeSox

[southsider2k5]

Actual, certified financial advisors with a fiduciary duty to avoid conflicts of interest or financial "advisors" in the same sense that the guy down at the dealership is an automotive "advisor" who puts his bottom line ahead of mine?

 

Is your personal money invested with one of these "advisors?" What sort of fees are you paying for their advice?

 

I am one person who actually has practical experience in both "advising" as I have been an actual licensed professional in the futures industry, (and was very nearly licensed for the general securities as well as I was on the calendar to take my 7 exam before I was laid off years ago) as well as the examinations and enforcement sides of the industry. While I never worked on the sales side of things, I did work on desks where I was paid to give people trading advice based on their questions and situations. Almost every single one of the questions I got was helping people do what they wanted to do, and not what I wanted them to do.

 

I can also tell you that you are using terms interchangeably that aren't fungible. There is no such thing as a financial advisor that isn't "certified". As I said last time we had this discussion, you HAVE to be licensed in order to give advice in a professional setting. Last I knew there were no governmentally sanctioned agencies along with compliance and examinations structures for car salesmen, so no, your assumption is entirely wrong there.

 

The non sequitor at the end is actually the problem. People like me actually know the rules, laws, and common sense investing advice. We aren't the ones who need access to financial professionals. People like you who don't know the that financial advisors have to be licensed, and what they should be doing in their financial situation are the problem. I won't suffer with this rule in the least because I have information. I also have access to financial professionals. You won't.

[StrangeSox]

We're talking about the difference between "suitability" aka salesmen holding themselves out as advisors while not necessarily disclosing up front that they can and do put their interests above yours and people with a fiduciary duty to put your interests first. Forgive me if I mix up the exact terminology, but I don't see how that point doesn't stand. Yes, broker-dealers are licensed, but they're still putting their duty to their brokerage (and their commission checks) above yours, and that's perfectly legal. In the long run, on average, that situation is worse for the individual investor because of the high fees that are sucked out of the accounts year after year, and many of these products carry up front loads as well.

 

The car dealer analogy isn't 1:1, but no analogy ever is. But the "suitability" financial professional is still closer to the car salesman who's #1 goal is profit for themselves and the dealer than it is to an impartial fiduciary. When I go to a tax professional, I expect them to be giving me unbiased advice that will benefit me the most, not advice that isn't necessarily "bad" for me but maximizes their own profits. Why should a financial professional be any different? The industry is generally pretty opaque and most people don't even realize that there's a suitability/fiduciary difference and that many financial professionals make their living based on what they sell you, not on giving you impartial advice.

 

The common sense investing advice is actually pretty simple, and for an overwhelming majority of people, there's zero need for complex investments. How many people who currently utilize the services of broker-dealer salesmen wouldn't be better served by a one-time fee meeting with a fiduciary advisor who'll steer them into appropriate low-cost financial investments?

 

 

 

Basically, is there a reason why the advice in "If You Can" doesn't apply broadly? If you follow that (or other advice along the same lines e.g. Bogle), there's no need to pay a bunch of fees that can amount to up to 40% of your total account value over your lifetime for financial "advice" and management. Yes, some people have complex scenarios, but those are generally higher net worth people who would have no problem finding and paying for fiduciary advisors to work out the best tax and estate planning they need.

https://www.etf.com/docs/IfYouCan.pdf

Edited September 8, 2017 by StrangeSox

[Chisoxfn]

I work for a Financial investment mutual company now, I honestly wouldn't trust these guys without laws in place that make them specifically call out investments that make them more money. Way too much incentive to screw people over, I just think of the mortgage crisis and how brokers were pushing variable rates because they made 5x as much on them, why wouldn't these guys sell do something similar?

Russ...where you working for. Since you reference Mutual, I presume it is an insurance company? Are you at CUNA?

[StrangeSox]

And they won't have to because money. So take your 1 year of credit protection and shut up.

 

When you check Equifax's site to see if your data was stolen, you get the benefit of agreeing to mandatory arbitration which bars you from any sort of class action or lawsuit within the court system.

 

 

PSA: If you check Equifax's site to see if your data was stolen, you *waive your rights* to sue Equifax or be part of a class action suit. pic.twitter.com/p4AlmmLQ3r

— Zack Whittaker (@zackwhittaker) September 8, 2017

 

 

 

edit: you can thank the Scalia ruling several years back in AT&T v Concepcion that held forced arbitration that bars class action is perfectly fine and couldn't possibly lead to any widespread problems and malicious incentives. Most consumer and even many employment contracts have these provisions these days, effectively barring most people from access to the court systems when they have a civil complaint and instead forcing them into private arbitration. Blocking class actions ensures companies will never see anywhere near the full civil impact from widespread abuse/fraud/etc. because an overwhelming majority of people won't file suit especially if it's a relatively low-dollar amount on an individual basis (e.g. $100 damages per person but across a million people).

 

don't know why editing broke that quotes to badly.

Edited September 8, 2017 by StrangeSox

[southsider2k5]

We're talking about the difference between "suitability" aka salesmen holding themselves out as advisors while not necessarily disclosing up front that they can and do put their interests above yours and people with a fiduciary duty to put your interests first. Forgive me if I mix up the exact terminology, but I don't see how that point doesn't stand. Yes, broker-dealers are licensed, but they're still putting their duty to their brokerage (and their commission checks) above yours, and that's perfectly legal. In the long run, on average, that situation is worse for the individual investor because of the high fees that are sucked out of the accounts year after year, and many of these products carry up front loads as well.

 

The car dealer analogy isn't 1:1, but no analogy ever is. But the "suitability" financial professional is still closer to the car salesman who's #1 goal is profit for themselves and the dealer than it is to an impartial fiduciary. When I go to a tax professional, I expect them to be giving me unbiased advice that will benefit me the most, not advice that isn't necessarily "bad" for me but maximizes their own profits. Why should a financial professional be any different? The industry is generally pretty opaque and most people don't even realize that there's a suitability/fiduciary difference and that many financial professionals make their living based on what they sell you, not on giving you impartial advice.

 

The common sense investing advice is actually pretty simple, and for an overwhelming majority of people, there's zero need for complex investments. How many people who currently utilize the services of broker-dealer salesmen wouldn't be better served by a one-time fee meeting with a fiduciary advisor who'll steer them into appropriate low-cost financial investments?

 

 

 

Basically, is there a reason why the advice in "If You Can" doesn't apply broadly? If you follow that (or other advice along the same lines e.g. Bogle), there's no need to pay a bunch of fees that can amount to up to 40% of your total account value over your lifetime for financial "advice" and management. Yes, some people have complex scenarios, but those are generally higher net worth people who would have no problem finding and paying for fiduciary advisors to work out the best tax and estate planning they need.

https://www.etf.com/docs/IfYouCan.pdf

 

For a lot of people, they may never need professional advice. What this is going to do is eliminate even the option of having it for most investors. It is also going to eliminate a lot of jobs and small companies, further enhancing the dominance of the Goldmans and JPMs of the world who have the profits to cover these costs. Far from helping the small investor, this is only going to further the gap between big and small, both in the companies and in the individuals. This is effectively creating investing segregation.

 

EDIT: And what the SIFMA report states, is that this is already happening, without the rule even officially having started yet. This is going to go over about as well as CEO compensation disclosure did under SOX.

[Jenksismyhero]

When you check Equifax's site to see if your data was stolen, you get the benefit of agreeing to mandatory arbitration which bars you from any sort of class action or lawsuit within the court system.

 

 

PSA: If you check Equifax's site to see if your data was stolen, you *waive your rights* to sue Equifax or be part of a class action suit. pic.twitter.com/p4AlmmLQ3r

— Zack Whittaker (@zackwhittaker) September 8, 2017

 

 

 

edit: you can thank the Scalia ruling several years back in AT&T v Concepcion that held forced arbitration that bars class action is perfectly fine and couldn't possibly lead to any widespread problems and malicious incentives. Most consumer and even many employment contracts have these provisions these days, effectively barring most people from access to the court systems when they have a civil complaint and instead forcing them into private arbitration. Blocking class actions ensures companies will never see anywhere near the full civil impact from widespread abuse/fraud/etc. because an overwhelming majority of people won't file suit especially if it's a relatively low-dollar amount on an individual basis (e.g. $100 damages per person but across a million people).

 

don't know why editing broke that quotes to badly.

 

 

We've discussed this, possibly when that decision came out - that's not the purpose of class action lawsuits. The class action is just an economical way to deal with a large number of claims. And the way that system has been abused over the years, it's really done nothing but enrich the handful of firms that specialize in prosecuting them.

 

I'd venture to guess that in the vast majority of situations where BIG CORP has wronged you, arbitration is a better avenue to have your claim handled. It's cheaper, it doesn't require legal representation, evidentiary rules are more relaxed and the whole process is less onerous meaning at the end of the day you'll get more money out of it.

 

edit: if you're concerned about BIG CORP running wild, that's the purpose of state and federal AG's offices and the various local, state and federal regulatory commissions. They're supposed to be going after these companies and fining them/suing them for damages to the public.

Edited September 8, 2017 by JenksIsMyHero

[Balta1701]

edit: if you're concerned about BIG CORP running wild, that's the purpose of state and federal AG's offices and the various local, state and federal regulatory commissions. They're supposed to be going after these companies and fining them/suing them for damages to the public.

And thankfully I can't figure out any way that a billion dollar company might be able to influence a politician who spends hundreds of thousands of dollars contributed by billion dollar companies on their election campaigns, so I'm totally certain there will be strong and corrective action taken this time.

[StrangeSox]

I'd venture to guess that in the vast majority of situations where BIG CORP has wronged you, arbitration is a better avenue to have your claim handled. It's cheaper, it doesn't require legal representation, evidentiary rules are more relaxed and the whole process is less onerous meaning at the end of the day you'll get more money out of it.

 

Only if it's worth it on the individual level (the case in question was $35--how many people would bother pursuing that vs. how many did AT&T defraud?), and only if you actually realize you've been defrauded. I've gotten several hundred dollars back over the years from various class action suits that I would never have otherwise known I was wronged. I'm sure law firms abuse the system too, and you do generally see them taking a big if not the biggest cut of any awards or settlement, but the opposite system of mandatory individual arbitration puts an awful lot of power in the hands of corporations.

 

It still seems completely bulls*** that in order to check out if Equifax screwed you personally even if you have never personally done business with them, you're required to give up your access to the court system. Would that really hold up?

 

edit: I guess the NY AG has already demanded that they take the language down

 

This language is unacceptable and unenforceable. My staff has already contacted @Equifax to demand that they remove it. https://t.co/vT0x7f5Xhc

— Eric Schneiderman (@AGSchneiderman) September 8, 2017

 

Edited September 8, 2017 by StrangeSox

[bmags]

I was thinking how I hope this lawsuit fully takes down Equifax but tbh I hope we get a political solution that "solves" the true identity problem. Fat chance probs.

[Balta1701]

I was thinking how I hope this lawsuit fully takes down Equifax but tbh I hope we get a political solution that "solves" the true identity problem. Fat chance probs.

Neither of those will happen. They're a financial industry firm, they're paid up with the right people and that's the important thing.

[bmags]

Neither of those will happen. They're a financial industry firm, they're paid up with the right people and that's the important thing.

 

Eh, this isn't goldman sachs. Status quo always wins, but the reputation of the credit bureaus within finance isn't prestigious.

 

I don't know about Equifax, but nothing Transunion does is also that complicated to unwind the way an actual financial institution would. They sell info, but they aren't making bets on info that I've seen anywhere.

[StrangeSox]

“We will not bill You until the free trial period has expired and provided that You have not yet cancelled your trial membership,” say the [Equifax "free credit security"] terms, dated Sept. 6. “In the event that You wish to continue Your membership beyond the trial period, do nothing and Your membership will automatically continue without interruption and We will begin billing You via the payment source You provided when you signed up for the free trial.”

 

if you sign up for this make sure to cancel before a year!

[Balta1701]

Plenty of execs at publicly traded companies have 10b5-1 plans that make it so they sell their shares on a scheduled basis. I'm not sure if that is the case here or not. If they don't have a 10b5-1 in place or these sales weren't planned, Im interested in how the SEC handles this. It might be difficult to ascertain when knowledge of the breach became available to the executives.

The stock trades were not part of a previous scheduled sale, federal filings show.

They'll walk away scot free and laughing.

[Harry Chappas]

They'll walk away scot free and laughing.

 

Did Martha Stewart spend more time in prison than all of the financial scheme crooks from the last ten or fifteen years combined?

 

 

[southsider2k5]

Did Martha Stewart spend more time in prison than all of the financial scheme crooks from the last ten or fifteen years combined?

 

No.

[Harry Chappas]

No.

 

It was a tad rhetorical.

 

[southsider2k5]

This is so much bigger than the Equifax hack, but is getting so much less publicity.

 

https://www.washingtonpost.com/news/busines...m=.e0dc5d9c955b