Top 10 Bank Lobbyist Rebuttals to Fiduciary Standard
It’s tough being a Wall Street Financial Advisor these days…
On April 14th, Department of Labor (DOL) Secretary Tom Perez issued a press release outlining the DOL’s intent to ensure the “fiduciary” standard applies when advisers give advice to retirement plans. What this means is that broker/dealer banks, branded as RIAs (think big bank wirehouse advisors) would no longer be permitted to sell high fee, complex instruments, unless they were in the BEST interest of the client (which is rare).
We expect Wall Street lobbying firms to vigorously oppose this measure, but DOL has already set up the PR machine to make their case.
To help level the playing field, we developed a simple translation guide that can help investors understand the common phrases that bank lobbyists will be discussing in the coming weeks.
Top Ten Phrases from Bank Lobbyists and their Translation
1) This new standard will limit investors’ choice of retirement options.
“This new standard will definitely limit my choice of yachts.”
2) Investors will “go it alone” and screw up their asset allocation.
“My Wolf of Wall Street theme party will have a totally inadequate seafood buffet.”
3) Rather than provide advice, advisors will sit on their hands for fear of legal reprisals associated with a fiduciary standard.
“Shhh. Don’t tell anyone there is a robust independent advisor ecosystem already available in the economy.”
4) New, innovative products will not be introduced to the marketplace.
“New, highly profitable, poor performing products will not be introduced to the marketplace.”
5) It’s not about the price you pay, but rather, the value you receive.
“It’s not about the price they pay, it’s about the soft dollars, revenue shares, and kickbacks we receive.”
6) Our legislative partners stand ready to protect investors and the middle class.
“We have taken every Congressman out for a lovely steak dinner and we will continue to do so.”
7) We have the best facilities in the world to provide cutting edge research and leading market insights.
“We pay the highest rent in Manhattan and hired a bunch of busted PhD students who can write fancy equations.”
8) Our robust RIA network fully leverages our economies of scale to provide superior service.
“We send our RIAs canned reports and shoddy back office services and charge them 50% of their revenues.”
9) We have been in the business for centuries.
“We have been exploiting clients for centuries.”
10) Our clients see the value we provide. They understand that we are well worth the price.
“Please don’t go to Vanguard. Please don’t go to Vanguard. Please don’t go to Vanguard.”
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Definitions of common statistics used in our analysis are available here (towards the bottom)