John Oliver on Retirement Plans & Fiduciary Advisors

[DHK]

***Language Warning***



Okay, I admit, I got a kick out of this one!

I liked a few things:
1 - Suze clips of "Can I afford it?"
2 - Titles don't necessarily mean anything.
3 - Those rings certainly looked pretty stupid.
4 - Fees on your money as a "lost opportunity cost" (even though they didn't call it that).


Some minor problems:
1 - Types and benefits of annuities discussed was not specified. We could assume they were referring to variable annuities.
2 - Not everyone has the risk tolerance appropriate for low-cost index funds.
3 - There are exams required to be licensed to sell financial products. You can't just "print a certificate".
4 - Running away from advisors who aren't fiduciaries... might be short-sighted.


All in all, I think it was a GREAT video for the knowledgeable fixed indexed insurance only agent!

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BTW, here's the link to certificate!

http://www.hbo.com/custom-assets/so...ight-with-john-oliver/FINANCE_CERTIFICATE.jpg

 

[unic.consulting]

And here's the elf certificate. http://www.hbo.com/custom-assets/so...night-with-john-oliver/ELF_CERTIFICATE_v2.jpg

 

[jboussea]

***Language Warning***

www.youtube.com/watch?v=gvZSpET11ZY

Okay, I admit, I got a kick out of this one!

I liked a few things:
1 - Suze clips of "Can I afford it?"
2 - Titles don't necessarily mean anything.
3 - Those rings certainly looked pretty stupid.
4 - Fees on your money as a "lost opportunity cost" (even though they didn't call it that).


Some minor problems:
1 - Types and benefits of annuities discussed was not specified. We could assume they were referring to variable annuities.
2 - Not everyone has the risk tolerance appropriate for low-cost index funds.
3 - There are exams required to be licensed to sell financial products. You can't just "print a certificate".
4 - Running away from advisors who aren't fiduciaries... might be short-sighted.


All in all, I think it was a GREAT video for the knowledgeable fixed indexed insurance only agent!

----------

BTW, here's the link to certificate!

http://www.hbo.com/custom-assets/so...ight-with-john-oliver/FINANCE_CERTIFICATE.jpg

What's your take on the fidicuiary rule..specifically how would they enforce i t?

 

[DHK]

It's not about "enforcement". It's about liability.

In short, if it can be proven in a COURT OF LAW that you did not act in your client's best interests, you may lose that lawsuit.

If it can be proven that you didn't understand the annuity contract you sold, that you sold it because of the commissions only, or because of a sales contest, or for whatever other reason... you may lose because you may have put your own interests above that of the client.

There are other threads, industry articles, and other commentary out there, but it's not the concept of putting clients first that's the problem. It's how you can prove that you're acting in a fiduciary capacity selling annuities and proving it in a court of law.

 

[Glen Shelton]

That "stock picking cat" should have its own brokerage! 11%

 

[DHK]

Forbes Welcome

It’s worth noting that no type of adviser is an automatic guarantee against mismanagement. Bernard Madoff charged clients a percentage of their assets and was a legal “fiduciary,” but that didn’t prevent him from being a crook. Fraud should be punished regardless of its source, and disclosure of potential conflicts of interest could certainly be made clearer. But if savers like their financial advisers, they should be able to keep them, without a bureaucrat or comedian coming between them.

 

[adpatel203]

Hey DHK, I am new and saw your name popup on the searches I did. I have some questions and was hoping you could PM me.

BTW when I first saw the John Oliver talking about the DOL I was shocked. We have been talking about this at my current company for the past year.

 

[scagnt83]

I think using the whole "acting in best interest" mantra for Fiduciaries is way overblown. Modern ERISA laws relating to Fiduciary capacities focus more on Transparency and Disclosure vs. the exact "actions" that person takes as far as investments. The new regs are starting to change that in an indirect manner... and really create an environment that changes very little other than decreasing the amount of options available to the consumer.

 

[DHK]

Exactly. It is primarily about transparency and (gasp!) actually knowing about your product.

I've been following someone on LinkedIn with their observations of the DOL ruling. Here's what he said regarding FIAs and BICE (with some notes and emphasis added on the list):

This is my second article about the interesting observations “hidden” in the preambles to the fiduciary regulation and the exemptions.

The recommendation of investments and insurance products to plans, participants, and IRAs will be subject to the best interest standard of care. (The best interest standard is a combination of ERISA’s prudent man rule and duty of loyalty.)

The legal requirement that advisers make prudent recommendations and act with a duty of loyalty is well understood in the retirement plan world, but is new to IRAs.

Also, it’s commonly conceded that the prudent man rule is more demanding than the suitability standard. But that begs the question, what is required of the adviser?

The DOL answered that question in the context of fixed indexed annuities, and the answer may be surprising. (For other insurance products and investments, the DOL would likely say that a similarly rigorous approach is required.)

Here’s what the DOL said:
“Assessing the prudence of a particular indexed annuity requires an understanding of:
- surrender terms and charges;
- interest rate caps;
- the particular marked index or indexes to which the annuity is linked; 
- the scope of any downside risk;
- associated administrative and other charges; 
- the insurer’s authority to revise terms and charges over the life of the investment;
- and the specific methodology used to compute the index-lined interest rate 
- and any optional benefits that may be offered, such as living benefits and death benefits.

In operation, the index-lined interest rate can be affected by participation rates; spread margin or asset fees; interest rate caps; the particular method for determining the change in the relevant index over the annuity’s period (annual, high water mark, or point-to-point); and the method for calculating interest earned during the annuity’s term (e.g., simple of compounded interest).”

Actually, there’s more than that. For example, based on ERISA precedence, an adviser would also need to evaluate the financial stability of the insurance company and its ability to make the annuity payments (e.g., 20 or 30 years from now).

From <https://www.linkedin.com/pulse/interesting-angles-dols-fiduciary-rule-2-fred-reish?trk=mp-reader-card>