Some Firms Still Resent Placing Retirement Investors' Interests Before Their Own

Some broker-dealers and insurance companies are complaining about the cost of putting investor clients' interests before their own when working with retirement investors, retirement plans, and investors who may roll out of a retirement plan (if it's in their best interest).

Meanwhile, according to the above article, "Principal Financial, based in Des Moines, reported second-quarter profit Thursday of $322.3 million on revenue of $3.04 billion." That's just the QUARTER's profit.

So $12 million to implement a rule that will help retirement investors end up with nest eggs that are TWICE as large as without the rule, well, it seems like it won't make much of a dent for the company.

Not every firm is complaining, but the firms complaining the loudest tend to be ones that had to pay millions of dollars in fines to regulators and restitution to investors for overcharging and misleading clients.

They've been getting away with deceiving clients into thinking they were getting advice in their best interest from a bona fide, fiduciary investment advisor, when in fact they were selling the stuff that paid the broker and firm the most, no matter the harm that caused the client. They did this through misleading advertising that said they put investors before themselves and broker titles that convey trust and confidence, not sales.

T hey managed for many years to escape fiduciary duty though loopholes in the original, 40 year old ERISA law -- pretending to advise clients in their best interest while actually acting in their own interest and the firm's interest. (Those loopholes were closed in the Department of Labor's Fiduciary Rule, finalized last April and effective in 2017 and 2018.)


The result is a generation of retirees who sacrificed to save for a dignified retirement, left with a fraction of their retirement nest egg -- often half, or even less, than what they should have. That's material and unconscionable.

Dude, where's the rest of my nest egg? Check the pockets of the broker-dealers, banks, insurers and mutual fund companies complaining the loudest about the DOL's Fiduciary Rule, the ones whose lobby groups are suing DOL to overturn the rule. It should also be noted that most of the firms complaining the loudest already have a registered investment advisory firm as part of their company.

That means they should already have a fiduciary process in place for clients of the RIA's reps. It's quite alarming that they don't seem to.

It's bad business to base the firm's business model on fleecing clients. Also, pretending to advise when one is actually acting in the interest of the firm and the broker rep is misleading and fraudulent.

Companies and intermediaries who work with retirement investors, including plans, participants, beneficiaries, investors who are contemplating a rollover, and, if that rollover IS in the best interest of the investor, the rollover assets must do this as a fiduciary. Even if they use one of the exemptions in the Rule, it's not a free pass for "business as usual with more disclosure." Disclosure does not fulfill fiduciary duty. They still need to work as a fiduciary, in the best interest of the investor. They'll need a fiduciary process, and additional knowledge of investment theory, asset allocation, diversification, due diligence, and rebalancing, monitoring and replacement when necessary. They'll need an Investment Policy Statement for each client. They'll need to document this process.

Independent Registered Investment Advisers, as fiduciaries across all their clients' accounts, already do this.

It's kind of ridiculous that companies with the kind of resources that the big broker dealers, banks, insurance companies and some mutual fund companies seem to be stymied about how to act in their clients' best interest.

But if they want to work with retirement plans and investors, they'll learn.