The DOL’s Fiduciary Law appears to have been postponed by the Trump Administration.
I’m not sure if I care or not. From my position, cancelling or postponing the law might be in my firm’s best interest because this stops requiring other firms from doing what we already do; work as a fiduciary to every client. Perhaps not bringing other firms to my firm’s level is best, for me anyway. However, this might be a big loss for individual investors because it puts responsibility of receiving advice in their best interest back into their own hands. Delaying or canceling the rule might have also just given an extended license and new market to the same group the rule intended to regulate.
Over the past 8 years, many investors became vulnerable to the rhetoric of politicized sales practices which warned of impending financial disaster due to ‘reckless political control’ of financial markets and economies. This created a boon era for companies who market gold as they hyped conspiracies of governments bent on causing the collapse of currencies.
Similar groups, along with local investment professionals, took advantage of the fearful times to pump expensive and ineffective anti-crash investment strategies to emotionally vulnerable investors. In particular, the sales of annuities have soared over the past 8 years with a virtual halt expected in April as the DOL’s new fiduciary rules would have all but stopped these sales from continuing. Why? Because most annuities were sold as investments inside IRAs; the one place where they should almost never be used.
IRAs, by their very nature of being purposed for retirement income, are long term investments. Long term investing means short term volatility should be tolerated in favor of long term trends. Using this logic, there is no long term period (20+ years) where the stock market did not produce an upward trend. Simply put; any long term investment vehicle designed to hedge a short term volatility event is simply not needed as a replacement to a well designed, diversified, and risk tolerance appropriate allocation. Succinctly expressed; no annuity or gold investment
needs to accommodate more than 5% of an investment allocation, period. Further, I do not suggest you own an annuity contract inside an IRA, ever.
Delaying or scrapping the fiduciary law might cause a very interesting thing to occur amidst a very controversial POTUS Administration change. Trump’s opposition is now doing what the extreme right has done the last 8 years; warn of an impending crash. Removing the DOL’s Fiduciary rule might place a new market opportunity right back into the hands of annuity and gold promoters. The left side of the isle just became gold’s biggest fan. Since working in the best interest of a client is appearing to not be a requirement, our liberal political base might just
be the next target of fear mongering annuity salesman. I guess it has to go full circle before it