- 10,349
Not sure how many around here keep up, but there is a big ongoing battle about enacting fiduciary standards. Both FINRA & the SEC are working on their own definition of fiduciary standard, and the DOL is too.
There are proposals for B/Ds and brokers acting under them to be held to the fiduciary standard as opposed to suitability.
The DOL is currently trying to enact regulations (which are being held up by congress thankfully) that would require IRAs to be incorporated in the fiduciary standard.
Of course the details arent finalized or clear yet, but requiring brokers of IRA investments to act in a fiduciary capacity would be a major game changer in the way annuity agents and retirement planners do business.
Also, if actually enforced; it could be a major game changer for clients in the eyes of some existing fiduciaries.
A fiduciary must always do whats in the best interest of the client. Take this example from a semi related article that I was reading:
"....In fact, some fiduciaries assume they need to measure the risk-aversion of a beneficiary before selecting investment option. In reality, risk-aversion doesn’t matter to the fiduciary. Let’s say you’re the trustee of an IRA for a 25-year who’s extremely risk-averse. Should you abide by the beneficiary’s risk aversion? No. As a trustee, you have to do what’s best for the beneficiary, and for an 25 year-old, that means placing his IRA in equities, which, while displaying greater short term volatility, tend to yield higher returns over the long term.
But wait! Isn’t the client always right? Maybe, but, as a fiduciary, in this case, the client isn’t the 25 year-old of today, but the 59 ½ year-old of tomorrow. Whew! Who knew this whole fiduciary thing involved time travel!...."
If forced asset allocation isnt socialism, I dont know what is!!
There are proposals for B/Ds and brokers acting under them to be held to the fiduciary standard as opposed to suitability.
The DOL is currently trying to enact regulations (which are being held up by congress thankfully) that would require IRAs to be incorporated in the fiduciary standard.
Of course the details arent finalized or clear yet, but requiring brokers of IRA investments to act in a fiduciary capacity would be a major game changer in the way annuity agents and retirement planners do business.
Also, if actually enforced; it could be a major game changer for clients in the eyes of some existing fiduciaries.
A fiduciary must always do whats in the best interest of the client. Take this example from a semi related article that I was reading:
"....In fact, some fiduciaries assume they need to measure the risk-aversion of a beneficiary before selecting investment option. In reality, risk-aversion doesn’t matter to the fiduciary. Let’s say you’re the trustee of an IRA for a 25-year who’s extremely risk-averse. Should you abide by the beneficiary’s risk aversion? No. As a trustee, you have to do what’s best for the beneficiary, and for an 25 year-old, that means placing his IRA in equities, which, while displaying greater short term volatility, tend to yield higher returns over the long term.
But wait! Isn’t the client always right? Maybe, but, as a fiduciary, in this case, the client isn’t the 25 year-old of today, but the 59 ½ year-old of tomorrow. Whew! Who knew this whole fiduciary thing involved time travel!...."
If forced asset allocation isnt socialism, I dont know what is!!