04-06-2016, 09:09 PM
Really? That much of a knee-jerk reaction? Did you read what Caversham excerpted?
Many brokerage firms plan to steer IRA investors who now pay commissions into accounts that charge annual fees of up to 1% or more.
I searched (and read deeper in some sections) all the proposed notices of rulemaking. See here. Most are scheduled to be published in the Federal Register on April 8th according to the notices on the individual sections. Nowhere does it state the government will levy a fee, fine or charge of any type of 1% or otherwise on end-user investors. Fines for those not adhering to the "fiduciary rule" are proposed which, in my opinion, is fine. Perhaps the underline will help clarify it.
Some brokerages and financial-advisory firms have warned that they may shed investors with smaller nest eggs—such as, $50,000 or less—because these accounts may no longer be profitable for the company to serve under fee-based arrangements. Others may shift small-balance clients into new stripped-down fee accounts, including with affiliated automated “robo” advisory services.
No longer profitable? I'm guessing the fees they've already been skimming are pretty high if they were profitable now but not in the future. For all you that argue about keeping commissions low and avoiding the recurring charges of management fees by funds by becoming self-directed investors must be pretty happy that the uneducated person saving for retirement is getting f$^&3 over by the hot-shot investment houses. I'm not.
Some brokers will continue to accept commissions. But to do so, they must ask clients to sign a “best interest contract” that requires the adviser to act in the investor’s best interests and includes information about the firm’s conflicts of interest. They must also make more detailed disclosure about costs and fees available to investors who request it.
The problem? Do you wait to open your brokerage statement before you find out what commission you paid for any transactions? I don't see a problem with being told up front how much I'm going to pay for a particular service. If a persons thinks it's worth it, there's nothing stopping him from paying it.
As many of us know, one benefit of DGI is the low fees. We pay ~$5 once to buy stock, and there are no more fees associated with that stock purchase for the rest of our life. The government's proposed 1% annual fee is absolutely ridiculous. I will wait to see how things shake out, but I may need to change which brokerage manages my IRA.
Yup, I agree with the low fees for B&H'ers. However, if the government is going to charge 1% annually (which it's not), what difference does it make which brokerage you use? Don't get the logic.
Basically, the proposed rules are trying to do is to make the advisor work in the best interest of the investor and disclose up front how much it's going to cost. RIA's are already required to follow these rules so what's the beef?
From the proposed rule:
I've heard first- and second-hand (from a tax advisor) on what some "investment bankers" do to pull in another juicy commission. I'm not surprised the WSJ wrote about all these sensational articles. Consider their biggest constituency.
Maybe Fidelity will stop hounding me with emails and letters about how my 401(k) at my new employer is not adequate because I'm not diversified enough. 90% in the closest funds I could get to dividend growth investing and 10% in cash for the next pullback was the best I could do. Junk bond funds? You must be kidding.
Many brokerage firms plan to steer IRA investors who now pay commissions into accounts that charge annual fees of up to 1% or more.
I searched (and read deeper in some sections) all the proposed notices of rulemaking. See here. Most are scheduled to be published in the Federal Register on April 8th according to the notices on the individual sections. Nowhere does it state the government will levy a fee, fine or charge of any type of 1% or otherwise on end-user investors. Fines for those not adhering to the "fiduciary rule" are proposed which, in my opinion, is fine. Perhaps the underline will help clarify it.
Some brokerages and financial-advisory firms have warned that they may shed investors with smaller nest eggs—such as, $50,000 or less—because these accounts may no longer be profitable for the company to serve under fee-based arrangements. Others may shift small-balance clients into new stripped-down fee accounts, including with affiliated automated “robo” advisory services.
No longer profitable? I'm guessing the fees they've already been skimming are pretty high if they were profitable now but not in the future. For all you that argue about keeping commissions low and avoiding the recurring charges of management fees by funds by becoming self-directed investors must be pretty happy that the uneducated person saving for retirement is getting f$^&3 over by the hot-shot investment houses. I'm not.
Some brokers will continue to accept commissions. But to do so, they must ask clients to sign a “best interest contract” that requires the adviser to act in the investor’s best interests and includes information about the firm’s conflicts of interest. They must also make more detailed disclosure about costs and fees available to investors who request it.
The problem? Do you wait to open your brokerage statement before you find out what commission you paid for any transactions? I don't see a problem with being told up front how much I'm going to pay for a particular service. If a persons thinks it's worth it, there's nothing stopping him from paying it.
As many of us know, one benefit of DGI is the low fees. We pay ~$5 once to buy stock, and there are no more fees associated with that stock purchase for the rest of our life. The government's proposed 1% annual fee is absolutely ridiculous. I will wait to see how things shake out, but I may need to change which brokerage manages my IRA.
Yup, I agree with the low fees for B&H'ers. However, if the government is going to charge 1% annually (which it's not), what difference does it make which brokerage you use? Don't get the logic.
Basically, the proposed rules are trying to do is to make the advisor work in the best interest of the investor and disclose up front how much it's going to cost. RIA's are already required to follow these rules so what's the beef?
From the proposed rule:
Quote:As amended, the Regulation provides that a person renders investment advice with respect to assets of a plan or IRA if, among other things, the person provides, directly to a plan, a plan fiduciary, plan participant or beneficiary, IRA or IRA owner, the following types of advice, for a fee or other compensation, whether direct or indirect:
(i) A recommendation as to the advisability of acquiring, holding, disposing of, or exchanging, securities or other investment property, or a recommendation as to how securities or other investment property should be invested after the securities or other investment property are rolled over, transferred or distributed from the plan or IRA; and
(ii) A recommendation as to the management of securities or other investment property, including, among other things, recommendations on investment policies or strategies, portfolio composition, selection of other persons to provide investment advice or investment management services, types of investment account arrangements (brokerage versus advisory), or recommendations with respect to rollovers, transfers or distributions from a plan or IRA, including whether, in what amount, in what form, and to what destination such a rollover, transfer or distribution should be made.
I've heard first- and second-hand (from a tax advisor) on what some "investment bankers" do to pull in another juicy commission. I'm not surprised the WSJ wrote about all these sensational articles. Consider their biggest constituency.
Maybe Fidelity will stop hounding me with emails and letters about how my 401(k) at my new employer is not adequate because I'm not diversified enough. 90% in the closest funds I could get to dividend growth investing and 10% in cash for the next pullback was the best I could do. Junk bond funds? You must be kidding.
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“While the dividend itself is merely a rearrangement of equity, over time it's more like owning an apple tree. The tree grows the apples back again and again and again, and the theoretical value of the tree doesn't change just because of when the apples are about to fall.” - earthtodan
“While the dividend itself is merely a rearrangement of equity, over time it's more like owning an apple tree. The tree grows the apples back again and again and again, and the theoretical value of the tree doesn't change just because of when the apples are about to fall.” - earthtodan