The requirements for a fiduciary focus on putting your clients interests first. The investment industry fights legislation to make this a law applicable to everyone.
Even a novice critical thinker would conclude that they fight this potential law because it will reduce their profits – which it would.
So it’s no surprise to read in today’s Politico’s Money Money by Ben White the following:
DEMS UNDER PRESSURE ON FIDUCIARY RULE – POLITICO’s Marianne Levine, Patrick Temple-West and Isaac Arnsdorf with Ben White: “The financial services industry is waging a fierce lobbying campaign to turn congressional Democrats against a Labor Department proposal to tighten the regulation of investment advice – amid indications that lawmakers’ campaign contributions may be at stake. … The lobbying frenzy won’t likely be enough to stop the regulation. But already, three House Democrats have voted to block the rule and two more have proposed alternative ‘principles’ to regulate brokers.
“Two House Democrats are urging the Labor Department to withdraw the rule, more than 90 are requesting changes, and 12 Democratic senators wrote to the Labor Department in August to discuss the industry’s concerns. Meanwhile, some influential Democratic legislators who support the ‘fiduciary rule’ are already seeing a drop in their campaign donations for 2016. Two pro-rule Democrats who sit on the House Financial Services Committee – Maxine Waters of California and Stephen Lynch of Massachusetts – find themselves well behind what they raised from the sector during the 2014 cycle”
As always, we need to continue to look out for ourselves.
If you seek financial advice, then make the first question; “Will we have a fiduciary relationship and are you going to be legally required to put my interests above yours?” If they don’t say unequivocally yes, walk out the door and find someone else.
Financial advisers that work under a fiduciary requirement abound. You just have to ask. They should act kinda like a doctor. Find the issues and help you, without the temptation to sell you procedures or drugs that you might not need to collect a commission.
Think of a non-fiduciary investment adviser like a used car salesman – or should I say a used-stock salesman. Some are good, some aren’t, but you think of the relationship differently than your doctor.
Ask that question and keep that in mind when looking for or dealing with professional investment advice.
2 thoughts on “Financial Advice and Critical Thinking”
Hope all is well with you. Would you mind giving me the formula for the time value of money if you want to save x amount of dollars in x amount of years? Thanks!!
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Depends on five things. N – number of time periods, I- the return on the investment (interest rate) PV – how much is the value presently PMT – how much will you regularly add to the present value and FV how much you want to have or will have in the future value.
Plug any four of the five into a financial calculator or a spread sheet and you will have your answer. Let me know if you have specifics. These calcs can be done as fast as you can hit the buttons on a calculator.