It’s difficult to put this genie back in the bottle,” Danford said of the impending rule and action by the DOL. “Consumers want protection and Wall Street looks bad fighting it.
St. Joseph, Missouri (PRWEB) June 17, 2017
It’s been more than two years since the Obama White House offered a report on the cost of conflicted investment advice to investors throughout the country, which spurred a Department of Labor investigation and the possibility of a new fiduciary rule. Despite the current administration’s reluctance to embrace those findings, the Department of Labor (DOL) began implementing the rule in early June 2017.
Essentially, the rule says that no investment adviser or broker can take commissions on products they sell to investors in retirement accounts.The White House report, which came out in February 2015, said investors lose billions of dollars per year due to conflicted advice from advisers who stand to make a profit on commissions.
Brokerage and insurance firms fought against the implementation of the fiduciary rule through lobbying and legal action, as they have much to gain in taking commissions. Dan Danford, founder/CEO of Family Investment Center, has written extensively on the topic since early 2015 and takes a different view than those firms.
"When investors get conflicted advice, it generally comes at the hand of 'fee-based' advisers, who use the terminology 'fee-based' as a smokescreen, because they’re actually taking commissions rather than fees alone," says Danford.
He suggests that the smarter move for investors is to seek out a “fee only” adviser, which means they only charge a fee and will not be swayed one way or another on a particular investment vehicle due to the fact that they aren’t motived by a commission.
“It’s difficult to put this genie back in the bottle,” Danford said of the impending rule and action by the DOL. “Consumers want protection and Wall Street looks bad fighting it.”
However, the Securities and Exchange Commission (SEC) has yet to act on non-retirement accounts and is still seeking public comments from retail investors and others. Whether or not the SEC can preempt the DOL hasn’t been determined.
“Even though there are no penalties this year, many firms have already adjusted their approach,” Danford said. “Many firms will eliminate commissions for IRAs and other retirement accounts and move clients to fee-based fee structures.”
Since launching Family Investment Center in 1998, Danford and his team of advisors have operated as fiduciaries. Danford has often said he “doesn’t understand any business model that doesn’t follow the fiduciary rule, because fiduciaries always put the best interests of clients before their own profits."
Listen to Danford’s thoughts about investing on his podcast, which can be found here: https://itunes.apple.com/us/podcast/money-is-freedom/id1143548139?mt=2
About Dan Danford and Family Investment Center:
Danford is author of the recently-published book “Stuck in The Middle: The Mistakes that Jeopardize Your Financial Success and How to Fix Them.” The book asks the question, “What if your middle class background is holding you back from the financial success you want?” Danford answers the question by explaining that many middle class money beliefs are just plain wrong, and he explains why in simple terms. He is also the creator of the podcast “Money is Freedom,” available on iTunes and Sound Cloud.
Dan Danford serves as Founder/CEO of Family Investment Center, a full-service, commission-free investment advisory firm. Based in St. Joseph, MO, Family Investment Center also serves clients in the Kansas City Northland area and across the country.
Danford holds a MBA and a second Master’s degree in Personal Finance Planning. In 2009, Danford was also quoted on “ABC News” for his insight into how parents can protect funds for their children’s college education. A 2006 article in The New York Times quoted Danford’s insights on working with a financial advisor. In 2014, Danford was featured in an article exploring solutions to math anxiety in the Voices section of the Wall Street Journal.