June 13, 2014
hey the banks don't want to act in your best interest neatI have no idea why this should surprise me, but this is a thing about a certain sector of the financial services industries I did not know, no matter how much I've been obsessing in my spare time over the past ten years or so:
Brokers [i.e., certified financial planners] are not necessarily required to act in their customers' best interest, even if they are advising on their retirement money.
Right? I've grown up with the maybe naive assumption that advisers of that sort — accountants, lawyers, brokers, etc. — were sort of honor-bound to act in the clients' best interests. In fact, in the law industry, wherein I have resided for years, this is a fact. The lawyers swear all kinds of oaths up and down to do so, and even we lowly paralegals have a fiduciary responsibility to the clients on behalf of our firm.
And the question raised in my mind is, if a financial planner is not bound to act in my best interest, why on freakin' earth would I give them my money?
And of course it gets worse. The quote above is from this news story about... well, lemme just continue the quote.
While that would seem to be a basic consumer protection, in Washington and on Wall Street it has proved to be wildly contentious.
Amid fierce pushback from the financial services industry, the Labor Department, which oversees retirement plans, recently delayed releasing a revised proposal that would require a broader group of professionals to put their clients' interest ahead of their own when dealing with their retirement accounts.
It's a very complicated story and likely to roll your eyes back into your head and not in a good way, concerning specifically planning retirement accounts and differing triggers and levels of fiduciary interest, but let me sum it up like this:
Quietly and without much attention from the press, the financial services industry are spending millions of dollars to not have to act in their clients' best interest.
Maybe that is what turned banking from a sedate but well-paying field into a rapacious greedhead nest of vampire squids — the point when they stopped thinking that acting in a client's best interest was a good idea.
UPDATE: Just had a friendly conversation with a knowledgeable Twitter friend who pointed out all the ways I've elided and oversimplified the issue. To summarize (and hopefully I'm not eliding and oversimplifying too much), the requirement at issue here is a very specific one relating to ERISA funds, as handed down from the Department of Labor. There are in fact all other duties and obligations that financial planners have. To quote, "But it remains clear that all advisers are fiduciaries who have to act in the best interest of clients and that brokers have suitability requirements [that govern their duties to clients].
I still think that on the face of this issue (and Hamilton Nolan agrees), The Banks look bad. But if I'm looking for another example of the ways that The Banks are trying to get away with it, this might not be the strongest one, as it is unimaginably complex. And clearly, there are actors in the financial services industry (presumably, my Twitter friend), that are actually good and decent people who are not trying to rip you off.
Complexity! Really hard to boil down into a couple hundred thousand words, let alone a couple hundred.
Also, mea culpa.
Posted by mrbrent at 10:36 AM
June 11, 2014
eric cantor and his petardMy God yesterday was a slow trickle of bad news, what with Iraq's little Sunni insurgency problem and the day's ration of stories about the rise of the National Front and Golden Dawn and all those other feckless bastards in Europe and this really terrible decision in a California court, I did not expect to come home to a big bright jewel of very good news waiting for me.
But let's talk about something first, since we're all growing old together here. I started this site a long time ago, in the middle of the Bush administration. If you recall, it was a time when we all had pseudonyms and we all obsessed with politics and we all discovered that the Internet was a great place that we could share the rants that would ordinarily only entertain our partners and friends. And by 2006, when the GOP lost the House and the Senate, we all logged into our blogs and proceeded with the digital clapping of shoulders and chucks under the chin, congratulating each other for the victory that our writing-about-things had brought.
We were ridiculous of course, and I think we're all a little bit embarrassed to remember it. We were intoxicated by purpose and self-importance and novelty. But we moved on. Now we are jaded. Now we only write about TV, because TV will not let us down in the end. (Except for Lost.)
I only bring this up because last night House Majority Leader Eric Cantor, a man who I have long despised as a cyncial, soulless, self-promoting ladder-climber, unexpectedly lost the primary to some dingbat Objectivist college professor ID'ed with the Tea Party. And when I read that news, why, I felt like it was 2006 all over again. In fact, I was this close to seeing if I could find my old DailyKos login/pw.
And today you'll read a whole passel of What Does This Mean For The GOP? and How Did This Happen?, far too many, in fact. But Cantor was a singularly craven and cynical character, with odiousness just emanating off of him, in ways that are blind to ideology and political orientation. It's quite a shock, him to lose to the Tea Party movement he in part helped to create, but it really couldn't happen to a nicer guy.
Posted by mrbrent at 10:33 AM
June 10, 2014
cord jefferson on everthingGo right now and read Cord Jefferson on the Racism Beat, which is basically the Zeitgeist boiled down and served in a Martini glass:
Or maybe it wasn't that I didn't have anything to say. Maybe it was the realization that writing anything would be to listlessly participate in the carousel ride: an inciting incident, 1,000 angry thinkpieces, 1,000 tweeted links, and back to where we started, until next time. Perhaps it was a feeling that writing anything would finally be too redundant to bear, a pursuit of too many sad and obvious words to heap onto so many other nearly identical words written down before, by me, by thousands of others.
I think that phenomenon is called in some corners C A S C A D E fatigue, but that might be tribe-specific.
The really fantastic thing about the piece is that it's nominally about Jefferson's experiences on his beat and the exhaustion that it caused (and what it says about racism in America circa now is very dead on), but it's also about the last ten years of digital journalism, the numbness caused by endlessly noting whatever thing it is that you find despicable. For example, say you had a blog named after a thing that tracked down carelessly spoken words. It's a very really possibility that the zeal in pointing out the lowness of character in these careless word-speakers might wear down to a nub after time.
But as vital (and enervating for Jefferson) the racism beat is, I would love to see him get off that beat and move on, because he knows his way around a freaking sentence.
Posted by mrbrent at 10:18 AM