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Bogle: “New Fiduciary Rule is Just the Beginning”

Bogle: “New Fiduciary Rule is Just the Beginning”
May 24
00:02 2016

Not far from the famous Hall where several dozen bold American Patriots launched a new nation, several dozen bold fiduciary advocates met for dinner in a second floor room of the City Tavern in the Historic District of Philadelphia, Pennsylvania. While the conversations before, during, and after the vintage Revolutionary-era meal remain off the record, the three journalists there were allowed to report on the prepared remarks spoken from the podium by a small but elite number of guests. It started with a surprise unscheduled speaker.

John Bogle needs no introduction, although Knut Rostad, Founder and President of the Institute for the Fiduciary Standard provided a glowing one. “Jack,” as he insisted I call him earlier in the evening, didn’t disappoint. Like a daring shot fired across the brow of the growing number of headlines suggesting the Fiduciary Era may be over, he blunted predicted the “new Fiduciary Rule is just the beginning.” He rallied the partisans, stating the fiduciary standard is meant not just for retirement plans (which the DOL’s Rule addresses), but for all investment accounts (which the SEC promises to address next year). But his warning wasn’t just for those opposed to placing the best interests of their clients first, it was aimed equally at policymakers in our nation’s capital. “The consumers will speak even if the law doesn’t,” he said.

Echoing and adding to Bogle’s sentiments, Michael Zeuner, Managing Partner at WE Family Offices in New York City and a member of the Board of Directors at the Institute for the Fiduciary Standard, said investment advice is a “noble profession,” not just a way to collect fees. He then sought to applaud the group before him, who, like the signers of the Declaration of Independence, were a small group, but, still, more than willing to take on the Wall Street aristocracy.

Zeuner mentioned those sitting among the (water filled) tankard laden tables including luminaries from academia, the regulatory sphere, and the world of business entrepreneurship, as well as journalists, leaders of professional organizations, and world class investors. He said they had one thing in common: They all “know fees matter.”

While he noted “progress has been made,” Zeuner pointed out “more has to be done, even if the odds are stacked against investors.”

Jim Patrick, Executive Vice President and Head of Advisor Services at Envestnet, as well as a member of the Board of Directors at the Institute for the Fiduciary Standard, reviewed five key trends that came out of a recent Investment Summit attended by roughly 2,300 advisers and hosted by his firm: 1) Advisors represent an aging population; 2) Product offerings are expanding; 3) Near zero interest rates are penalizing savers; 4) Advisers and their employees are burdened by regulatory bottlenecks; and, 5) There is a financial planning floor above which financial planners must soar above. He concluded by saying we need to see a “receptive ear from industry that understands what ‘trust’ means.”

Tamar Frankel spoke next. She is a Professor at Boston University School of Law and Advisor to the Institute for the Fiduciary Standard. She hopes to see the “development of rules imposed by fiduciaries on themselves,” adding, “self-regulation does not mean self-sacrifice. In fact, it can be financially rewarding.” She suggested the attendees were builders within the “domain of obedience to the unenforceable.” Frankel stated “the real greatness of a nation is the measure of the extent the nation trusts its citizens and how the citizens respond to that trust.”

Fitting, Rostad ended the evening with a proclamation that “investor distrust matters.” As the Institute embarks on its “Campaign for Investors,” he concluded the Tribute to Fiduciary Leaders dinner with the rallying cry, “Investment advice means disinterested advice, and this is common sense.”

Are you interested in discovering more about issues confronting 401k fiduciaries? If you buy Mr. Carosa’s book 401(k) Fiduciary Solutions, you’ll have at your fingertips a valuable reference covering the wide spectrum of How-To’s every 401k plan sponsor and service provider wants and needs to know.

Mr. Carosa is available for keynote speaking engagements, especially in venues located in the Northeast, MidAtantic and Midwestern regions of the United States and in the Toronto region of Canada. His new book Hey! What’s My Number? – How to Increase the Odds You Will Retire in Comfort is available from your favorite bookstore.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


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