{"id":183037,"date":"2015-04-01T19:27:00","date_gmt":"2015-04-02T00:27:00","guid":{"rendered":"https:\/\/www.panix.com\/~msaroff\/40years\/2015\/04\/01\/new-york-city-wants-to-treat-financial-advisers-like-cigarettes\/"},"modified":"2015-04-01T19:27:00","modified_gmt":"2015-04-02T00:27:00","slug":"new-york-city-wants-to-treat-financial-advisers-like-cigarettes","status":"publish","type":"post","link":"https:\/\/www.panix.com\/~msaroff\/40years\/2015\/04\/01\/new-york-city-wants-to-treat-financial-advisers-like-cigarettes\/","title":{"rendered":"New York City Wants to Treat Financial Advisers Like Cigarettes"},"content":{"rendered":"

Basically, they are suggesting that financial advisers be labeled like cigarettes<\/a>:
<\/span><\/p>\n

Last week, New York City Comptroller Scott Stringer unveiled a new plan<\/a> to regulate financial advisers, the first of its kind, that tries to protect the average investor from advisers who don\u2019t have to put their clients\u2019 best interests first. <\/span>
<\/span>
Currently, the regulations that apply to financial advisers have a carve out for broker-dealers who can give financial advice but don\u2019t have to act as what is called a fiduciary. What that means in practice is that they can recommend investment products to their clients that serve to make them more money but aren\u2019t necessarily the best or right option for their clients. A recent White House report estimates that this conflicted advice costs workers who invest their savings about $17 billion<\/a> each year. <\/span>
<\/span>
Stringer has proposed that New York State pass legislation that would require financial advisers to disclose whether or not they are fiduciaries and whether or not they have to put a client\u2019s interests ahead of their own. Brokers, financial planners, and retirement advisors who don\u2019t follow the fiduciary standard, which means put their clients\u2019 interests first, would have to state at the outset: \u201cI am not a fiduciary. Therefore, I am not required to act in your best interests, and am allowed to recommend investments that may earn higher fees for me or my firm, even if those investments may not have the best combination of fees, risks, and expected returns for you.\u201d <\/span>
<\/span>
\u201cLike putting a warning label of a package of cigarettes, this would be a warning label for people who want to protect their life savings,\u201d Stringer told ThinkProgress. \u201cIf you\u2019re working for a company that\u2019s about the company\u2019s product and not about your client, we want you to own up to that.\u201d The rule, he pointed out, wouldn\u2019t say that these advisers can dole out advice to those who want it, but that they have to clarify the standard they follow.<\/p>\n

\u2026\u2026\u2026<\/p>\n

States can\u2019t have a stronger fiduciary standard than the federal regulations. But they do have the authority to regulate disclosure. Stringer\u2019s proposal, while not as strong as the federal one, could have an impact. \u201cThe disclosure they\u2019ve proposed is pretty stark, which improves the chances that it would be effective,\u201d Roper said. \u201cAt least it\u2019s not a bunch of legalese.\u201d The average investor, usually someone seeking out advice for retirement planning, should be able to understand the warning label that Stringer has laid out.<\/p>\n

That clear language could steer people away from investors who may not serve their needs. \u201cThis might make them think\u2026maybe I should go ask someone else,\u201d Hiltonsmith said. \u201cIt could actually change the market a little bit and drive people toward fiduciary advisers.\u201d<\/span><\/p><\/blockquote>\n

Seeing as how the financial industry makes a lot<\/b> of its money by exploiting these ambiguities, I can understand how they will oppose this tooth and nail.<\/p>\n","protected":false},"excerpt":{"rendered":"

Basically, they are suggesting that financial advisers be labeled like cigarettes: Last week, New York City Comptroller Scott Stringer unveiled a new plan to regulate financial advisers, the first of its kind, that tries to protect the average investor from advisers who don\u2019t have to put their clients\u2019 best interests first. Currently, the regulations that …<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1005,1233,1004,985],"tags":[],"class_list":["post-183037","post","type-post","status-publish","format-standard","hentry","category-business","category-disclosure","category-finance","category-regulation"],"_links":{"self":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts\/183037"}],"collection":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/comments?post=183037"}],"version-history":[{"count":0,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts\/183037\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/media?parent=183037"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/categories?post=183037"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/tags?post=183037"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}