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US Chamber of Commerce swallows the Kool-Aid June 15, 2015

Posted by forwardfinancialplanning1 in Uncategorized.
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The broker dealer world has been staging a media campaign to circumvent the proposed Department of Labor rule which would expand ERISA fiduciary status to financial professionals who provide advice to IRA’s.  In an attempt to preserve their commission flows and revenue sharing arrangements with retirement plan administrators, broker dealers have employed a “fear tactic” suggesting that if required to be fiduciaries (and therefore place their clients’ interests ahead of their own) broker dealer employees will stop servicing small employer plans and individuals all together.

The US Chamber of Commerce has taken the bait!!   They recently published a report entitled  “Locked Out of Retirement” which concurs with the broker dealer argument.  So in essence, the Chamber of Commerce is embracing a business model which essentially says, “in order to serve this market, we have to fleece the employees with biased advice and a very opaque cost structure.”

Well, this “research” paper contains the answer to its own stated problem—the advisor who provides advice in these circumstances must charge “a level fee” for his/her advice.  Perhaps that’s too simple for the authors of the paper to comprehend, or perhaps the Chamber embraces opaqueness in pricing.  The advisors who are serving this market today are obviously reaping enough income for it to be worthwhile.  Under this new proposal, they will simply have to show this income directly via the level fee that they charge to provide it, instead of hiding it via incomprehensible (to most employees) 12b-1 fees and revenue sharing arrangements with other plan providers.

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