The Derivative Project

Raise Your Hand if You Think Your Retirement Adviser is Giving Advice to Help You Retire

Raise Your Hand if You Think Your Retirement Adviser is Giving Advice to Help You Retire

Yes, every hand went up in the U.S.  Every retirement saver thinks that someone who is “registered” by FINRA or the SEC has been trained and vetted and is acting in their best interest when one provides them advice for their retirement savings.

Attention retirement savers! There is a quiet war, not covered by main stream media, going on that involves the brokerage industry’s profit model that conflicts with the life savings of retirement investors.  Here is the dilemma:
If an retirement advisor (i.e. salesperson – stockbroker or “financial planner”) is forced to give unbiased advice on an ongoing basis that is in the best interest of the person saving for retirement in an IRA or SEP, they will no longer be able to do so because they will not make as much money.  The brokerage industry has told the Department of Labor it is just not cost effective for the brokerage industry to act in the best interest of the retirement saver (a “fiduciary” standard) in an IRA or SEP account.  They must continue to act in the best interest of the brokerage firm, the “suitability” standard.
Please note that 401k’s and 403b’s currently have a “fiduciary” standard under ERISA rules and the right to go to State or Federal court if believe those providing advice have breached securities’ laws.
Here is a report from the brokerage industry recently released and delivered to the Department of Labor as to why it is impossible to provide advice to IRAs, acting as an ERISA fiduciary.

Most salespeople misrepresent their qualifications to retirement savers so they can get the business. 

Here is a link to an Investment News article on a Cerulli Study about this misrepresentation to retirement savers:
“Most advisers overstating their expertise: Cerulli study finds 59% call themselves financial planners, but only 30% fit the bill in pattern of misrepresentation.”
So what should the Department of Labor and the SEC do to resolve this issue?
The SEC and the Department of Labor have but one choice, tell those “retirement advisors”, also known as salespersons to peddle their wares to others than retirement savers.  It is much more fitting for salespersons to focus their attention on “sophisticated investors” who understand the difference between a fiduciary and a salesperson, particularly when one’s life savings are at risk.
The Derivative Project’s next blog post will focus on the tragedy that the “trusted retirement adviser” be that a CFA, CFP or other random title, has no up-to-date training on how to manage your retirement assets.  Their training and experience is based on long-ago obsolete portfolio models, that the main brokerage firms and asset management firms have not taken the money to train your retirement “advisor” on new developments.  It is just not cost effective for them.
One knows both the medical industry and legal industry have professionals that are required to go through annual training.  This is not the case in the investment advice industry.
The brokerage industry and the SEC refuses to respond to  The Derivative Project requests to ensure all retirement advisers are fiduciaries and professionals with mandated training and experience in the latest tools and strategies to ensure your hard-earned savings will be managed by professionals trained and acting in your best interest.  This is not currently the case.
The loss of over $2 trillion dollars in retirement assets in the 2008 financial crisis could have 
been minimized if the brokerage and asset management industry had put the best interest of American retirement savers over that of the brokerage and asset management industry.