- 10,704
That would most certainly count as retirement advice under the new regulations.
New DOL Rule May Shut Down Ramsey's Advice
- Thread starter Cash
- Start date
That would most certainly count as retirement advice under the new regulations.
As long as SEC allows financial entertainer exclusion Dave Ramsey can continue his show business with the small fine print at the end of the show. He may make slightly less money as 0.000003% of US population may care to wonder about what the word fiduciary means and question Dave Ramsey's independence. He may lose some future business. I hope he has his spending under control, I would not want him to go bankrupt again.
- 17,041
Where they would likely get him is that his show generates leads for his "endorsed local providers." The lead generation SHOULD be submitted with each application as marketing materials. It isn't treated that way at all currently.
- 10,704
This has nothing to do with the SEC. This is a DOL regulation and the DOL is the main regulator for Qualified Retirement Plans above and beyond the SEC.
The current version of the regulations have no exclusion for financial entertainers. What the SEC regs say are irrelevant, they only apply to securities transactions.
Without trying to make this a legal discussion, there is no agreement where the line between DOL and SEC is according to many security lawyers. I have many clients from Harvard University including the law school and I had several discussions about this.
DOL has no interest in getting this overturned at the Federal court level or at the US Supreme court. When someone charges 300 to 400 basis points for a variable annuity when they were paying 12 basis points for their 401K balance before, this is a safe case where DOL can interfere.Supreme court won't likely hear an appeal on a case like this. When DOL starts clearly interfering in areas where there is another regulatory authority, the chance for a supreme court review increases.
If DOL were to pick on people like Dave Ramsey, Jim Kramer, then they would be taking on the advertisers and the media that makes money from it. It will also turn the public against them. There are people who like Dave Ramsey.
Most likely Dave Ramsey will alter some of his talk, the disclaimer will change and it will be business as usual. We selectively apply our immigration laws, we will also selectively apply the DOL rule.
- 10,704
I dont care who your clients are... I have clients from top law schools all over the country including harvard (big woop). I keep up with ERISA law on a weekly basis and attend seminars and webinars from some of the top minds in the specialty of ERISA law. (since my main focus is on corporate retirement plans)
Yes there are sometimes overlapping areas within Qualified Plans. And yes, historically the DOL has allowed the SEC to run point when a violation is overlapping both regulatory entities.
But the SEC has no regulatory authority when it comes to ERISA regulations. And a Qualified Plan does not automatically use Securities to fund it. So just because its a Qualified Plan, it does not make it automatically regulated by the SEC.
That is why the SEC has no say in how these regulations affect financial entertainers. Not all Qualified Plans fall under SEC (or FINRA) jurisdiction. The SEC can only get involved when Securities violations have happened.
So if a Qualified Plan does not automatically fall under SEC jurisdiction, how can the SEC regulations supersede ERISA regs? Answer is that they dont. If Securities are not automatically involved, then ERISA is applied first. If Securities enter the picture and there is a SEC violation that overlaps into ERISA, then the SEC regulations usually take precedent.
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This we agree on. Currently, an argument could be made that any advice pertaining to a Qualified Plan (not including IRAs) falls under a Fiduciary Duty. Since its never been fully challenged in court it is one of those academic grey areas... anyway... obviously these guys give advice about peoples 401Ks/403Bs/etc. And the regulators have never batted an eye.
But with this new push you never know what might happen. They arent going to lock up Dave Ramsey in the middle of his show... lol. But they would likely issue guidance about what limits there are to financial commentary when it is specific to an individual. Which means that the entertainers will just have to tweak how they give advice.
- 11,997
"I'm not one of my endorsed local providers so you should talk to them first, but based on what you're telling me I would...." or some variant of that.
My wife's family loves listening to Ramsey so on a six hour car ride I decided to listen to some of his podcasts. Frankly, I was entertained by the consistency. Most of his advice revolves around simply saying "don't buy stuff you can't afford". That's it. Admittedly I haven't listened to every word the man has spoken, but in listening to about six hours of his shows, but the advice he gives seems largely uninteresting.
Here is an episode of the Dave Ramsey show:
Dave "Hi Listener, what's up?"
Caller "there is this thing that I want, I really want it, it would make my life so wonderful and it means a lot to me."
Dave "Do you have any debt?"
Caller "Yes, some credit cards and blah blah balh"
Dave "Pay off the debt, get your emergency fund taken care of, then go buy that thing you're so excited about".
Next call:
Caller "Dave, how are you?"
Dave "A whole lot better than I deserve, what's up?"
Caller "Hi dave, I love your show so much, it's just so great, I'm different than everyone else you've told to pay off their debt. This house I really like is awesome, but I mine is almost paid off, what should I do?"
Dave "Well, sounds pretty simple to me. Pay off your house and then when you save up enough to buy that other house you want, go buy the one you want".
The guy isn't doing advanced financial planning over the phone. If you have a WL policy he'll say to dump it, get some cheap term, and then pay off your debts. He'll see to invest in funds vs wl, but that is almost literally the beginning and the end of the investment advice I've heard him give. Again, he is an entertainer. I started to enjoy listening to it because I found it entertaining how entertained people were by hearing the same damn advice he's been telling them forever. "Long time listener, first time caller, what should I do?" Pay off your freaking debt; he's as predictable as gravity.
- 10,704
Pretty much. Or "most people in situations like yours should...". It all depends on how the final regs read.
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I dont listen to Ramsey. I have seen some clips before and I know that he tells people that they will receive returns from mutual funds that an advisor would not be able to say. Maybe he doesnt say that mutual funds will return 12% anymore.
I do watch Jim Cramer and he does give specific investment advice when it comes to 401Ks. He recommends index funds in your 401k. Sometimes he does this in a general nature. But he also tells people the same thing when they call and ask him about their 401k.
He would most certainly have to tweak what he says about 401K plans I would think.
Yeah, Dave Ramsey won't be and can't be shut down. We are the professionals that took the exams and got the licensing to sell and advise. We openly place ourselves on the line for our customers. Dave Ramsey and the others out there has dedicated themselves to the profession of entertainment. So they are not bound by any law but for the first amendment to say what they believe. So nope, Dave will be around and so will the others.
- 10,704
No one is saying that Dave will be shut down totally. But the new regulations do not exclude entertainers. So it is 100% possible that he will no longer be able to give advice when it comes to an individuals Qualified Plan. He could still speak "in general", but he cant tell Joe that he specifically needs to be in 50%equities and 50%fixed income.
When you are considered a Fiduciary the 1st amendment does not mean a thing because you are no longer an entertainer/journalist/reporter/regular citizen/etc. Your considered an Adviser who has a Fiduciary duty to the client.
And so far the DOL has shown no interest in adding an exemption for financial entertainers. Thankfully, they are actually focusing on what is important.
