Higher fees, less returns

So you are old and retired and you can only get a small return on your money?  2% on CD’s?

The Labor Dept. just enforced a Presidential Order to make all investment advisors “act in the best interests of their client”  This is called the Fiduciary Rule.  Now you might think that Leroy, your investment advisor who operates out of the back of an old Mercury Marquis trunk, should have had your best interest in mind all the time.  Here he was selling you stocks that benefitted himself with bigger commissions and fees.  So in that sense, the Fiduciary Rule applied to all finance people was a good thing.  But here’s the hidden complication.  Leroy is suable if he doesn’t act in your best interest.  No, you may die, but your heirs, irascible cousin, Sebastian, wants to sue Leroy and get as much as he can.  So what is Leroy to do for now?  He has little research staff to hide his decisions behind, so he is going to offer you only a 2% CD.  Everything else is risky and for your own good, you had better take on no risk. You get little more than if you’d invest on your own. But the stodgy investment protects your broker from charges that he risked too much.

The fiduciary duty has applied for a long time to certified financial planners and FIA’s who work for the biggest brokerage houses.  They can still recommend stocks as part of your overall financial plan—but only up to a limited percentage of your investments based on models of your age, etc.  If you want to invest in something risky, the advisor might say no.  A portfolio of 100% stocks is out of the question.  Making Wall Street firms suable makes Obama happy.  Most of his donors are lawyers who love to sue.  He and Hillary hate Wall Street, so anything to make brokers miserable!  But of course the broker's cost of defending themselves will come out of your pocket in higher fees.  Higher fees, less returns and sanctimonious Democrats and consumer interest groups.  The old days of guessing an Apple or Walmart, investing heavily and making a fortune aren’t impossible, just more unlikely.  You'll get offered old conventional companies like Baldwin Locomotive or Seymour Buggy Whips or Philco Radio.

The consumer interest groups get good publicity out of the deal.  Look how Consumer Reports just held your broker’s feet to the fire!  That same Consumer Reports and AARP also advocate for vote-by-phone in your next election.  Of course, the reason you get a socialist is that some Russian hacker voted 38,000 times and nobody in the county election board can figure it out.  To be continued.

 

And Hillary gets elected because "She Will Fight For You"