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Yes, this is due to the new fiduciary rule from the DOL...which Trump may throw out or delay.
The issue is that the investment firms are interpreting the new rule in different ways. Because of the rule some firms are making their clients move to advisory accounts. This is where they charge you the 1-1.5% annual fee on top any costs the investments have. For example, if he has you in mutual funds you would pay the funds managements fees as well as his 1.5% which could bring total fees to over 2%. I feel this sucks for the guy that is sitting in some A share mutual funds paying only .5% a year and now he has to move his money into an account that is charging him 2%. The logic is that now this rep has to look out for you, stay in touch and recommend changes to show he is doing his job. The sad part is that not everyone needs this. There is nothing wrong with just sitting in a good fund and leaving the money alone for decades.
Other firms are allowing clients to keep the money where it is and having the client sign a best interest contract (BIC). By signing this you are not forced into advisory accounts but some firms think the BIC is too expensive, burdensome and will just lead to a ton or law suits. That is how your current firm must think so they don't want to deal with it and are forcing you to the advisory account.
I feel the government thought they were helping people but at the end of the day all this will do is end up costing clients more money. People that were paying next to nothing will now end up paying around 2% a year. I'm finding that the companies that won't allow the BIC are telling their clients there is a new law and they have to move their money. They are not telling the entire truth that they could move their money to another firm and keep paying the lower fees. I get why they are doing that as they would likely lose a ton of their clients and be out of a job.
The sad thing is that Trump could throw out or change the entire thing but it won't much matter as companies have already spent billions getting ready for this new rule which starts in April. It is too late to go and change everything back now. Basically the Government has created a big mess and none of this was passed by congress...it is another Obama mandate. I get that the idea is popular because anyone that is paid to help you with your money is thought to be a crook and laws need to be passed to protect you from them. I just don't get why this standard isn't used for all the other perceived crooks (car dealer, insurance salesmen, plumbers, electricians, mechanics...). I mean all these guys get paid to help you and we all know they are just trying to charge us as much as they can get away with.
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