I have no idea what point this rambling post is supposed to make. It's just obvious how little you actually know about the financial industry.

You and me both.  What exactly is an "impersonal" mutual fund?

I am by no means a professional investor, though I have done well managing my own money.  Could I have probably done more by hiring a professional adviser?  Probably absolutely.  The thing is, in my mind a financial adviser is going to work in their client's best interest as well as their own interest.  Better "rate of return for the client" = "better commission" for the professional (it's how they earn their living).  Also, if the adviser is doing a good job with their client's accounts their client(s) are more likely to recommend them (new business) to others.

It's called the free market (ie. Capitalism).

An impersonal mutual fund is the kind where you call the general line for Schwab and you get helped by whoever picks up, it'll be someone different every time.

A more personal arrangement is where you have your own broker or dealer, same person every time.

Commissions do not usually violate the fiduciary principle. The fiduciary principle still allows the person or company who helps you to do well while you do well. They are allowed to take a reasonable transaction fee and even to keep a reasonable percentage of your earnings as their commission, as long as both things are disclosed up front.  But they are not allowed to accept kickbacks or favors from their vendors. And they must be willing to discuss all options that a client is considering on a level playing field, not deceptively try to steer the client into something with low returns but good kickbacks.

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My fellow southpaw Mark Brunell will probably always be my favorite Jaguar.

You and me both.  What exactly is an "impersonal" mutual fund?

I am by no means a professional investor, though I have done well managing my own money.  Could I have probably done more by hiring a professional adviser?  Probably absolutely.  The thing is, in my mind a financial adviser is going to work in their client's best interest as well as their own interest.  Better "rate of return for the client" = "better commission" for the professional (it's how they earn their living).  Also, if the adviser is doing a good job with their client's accounts their client(s) are more likely to recommend them (new business) to others.

It's called the free market (ie. Capitalism).

An impersonal mutual fund is the kind where you call the general line for Schwab and you get helped by whoever picks up, it'll be someone different every time.

A more personal arrangement is where you have your own broker or dealer, same person every time.

Commissions do not usually violate the fiduciary principle. The fiduciary principle still allows the person or company who helps you to do well while you do well. They are allowed to take a reasonable transaction fee and even to keep a reasonable percentage of your earnings as their commission, as long as both things are disclosed up front.  But they are not allowed to accept kickbacks or favors from their vendors. And they must be willing to discuss all options that a client is considering on a level playing field, not deceptively try to steer the client into something with low returns but good kickbacks.

The fiduciary rule did not allow for commissions unless they sign a waiver called a best interest contract which means the advisor is no longer held to a fiduciary standard but to a lesser "Best interest" standard which is the required FINRA standard for all advising. Commissions present a potential conflict of interest which means all commission based accounts don't meet the fiduciary standard. Fiduciary accounts are always fee based.

"Best interest" allows a client to have input into the individual accounts as long as the Advisor discloses potential risks the clients choices may have.

With fiduciary accounts, clients aren't allowed to make any individual investment choices because allowing someone who is unlicensed and unqualified to have input in what investments to choose would violate the fiduciary standard.

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An impersonal mutual fund is the kind where you call the general line for Schwab and you get helped by whoever picks up, it'll be someone different every time.

A more personal arrangement is where you have your own broker or dealer, same person every time.

Commissions do not usually violate the fiduciary principle. The fiduciary principle still allows the person or company who helps you to do well while you do well. They are allowed to take a reasonable transaction fee and even to keep a reasonable percentage of your earnings as their commission, as long as both things are disclosed up front.  But they are not allowed to accept kickbacks or favors from their vendors. And they must be willing to discuss all options that a client is considering on a level playing field, not deceptively try to steer the client into something with low returns but good kickbacks.

The fiduciary rule did not allow for commissions unless they sign a waiver called a best interest contract which means the advisor is no longer held to a fiduciary standard but to a lesser "Best interest" standard which is the required FINRA standard for all advising. Commissions present a potential conflict of interest which means all commission based accounts don't meet the fiduciary standard. Fiduciary accounts are always fee based.

"Best interest" allows a client to have input into the individual accounts as long as the Advisor discloses potential risks the clients choices may have.

With fiduciary accounts, clients aren't allowed to make any individual investment choices because allowing someone who is unlicensed and unqualified to have input in what investments to choose would violate the fiduciary standard.

I think we are using the word "commission" differently.

"An advisor who receives both a flat fee and commissions is considered fee-based. Fiduciaries must be fee-only or fee-based. Non-fiduciaries can be commission-based or fee-based."

A fiduciary can still receive commissions.

https://money.usnews.com/investing/inves...ciary-duty

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My fellow southpaw Mark Brunell will probably always be my favorite Jaguar.

Please keep this on topic or I will be forced to lock this thread.

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The fiduciary rule did not allow for commissions unless they sign a waiver called a best interest contract which means the advisor is no longer held to a fiduciary standard but to a lesser "Best interest" standard which is the required FINRA standard for all advising. Commissions present a potential conflict of interest which means all commission based accounts don't meet the fiduciary standard. Fiduciary accounts are always fee based.

"Best interest" allows a client to have input into the individual accounts as long as the Advisor discloses potential risks the clients choices may have.

With fiduciary accounts, clients aren't allowed to make any individual investment choices because allowing someone who is unlicensed and unqualified to have input in what investments to choose would violate the fiduciary standard.

I think we are using the word "commission" differently.

"An advisor who receives both a flat fee and commissions is considered fee-based. Fiduciaries must be fee-only or fee-based. Non-fiduciaries can be commission-based or fee-based."

A fiduciary can still receive commissions.

https://money.usnews.com/investing/inves...ciary-duty

A person who works in the business uses terms differently than a neophyte known to torture words for his own hubristic benefit?

You. Dont. Say.

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“An empty vessel makes the loudest sound, so they that have the least wit are the greatest babblers.”. - Plato

I think we are using the word "commission" differently.

"An advisor who receives both a flat fee and commissions is considered fee-based. Fiduciaries must be fee-only or fee-based. Non-fiduciaries can be commission-based or fee-based."

A fiduciary can still receive commissions.

https://money.usnews.com/investing/inves...ciary-duty

A person who works in the business uses terms differently than a neophyte known to torture words for his own hubristic benefit?

You. Dont. Say.

US News is using my definition, so...

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My fellow southpaw Mark Brunell will probably always be my favorite Jaguar.

A person who works in the business uses terms differently than a neophyte known to torture words for his own hubristic benefit?

You. Dont. Say.

US News is using my definition, so...

And?

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“An empty vessel makes the loudest sound, so they that have the least wit are the greatest babblers.”. - Plato

Get this thread back on topic......

Trump Reacts After Judge Dismisses DNC Lawsuit Accusing His Campaign of Interfering in 2016 Elections

https://m.theepochtimes.com/trump-reacts...SjH9UsOqt0

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Wants to join the "cereal box" dating service. I've dated enough flakes and nuts...all I want is the prize now.

A person who works in the business uses terms differently than a neophyte known to torture words for his own hubristic benefit?

You. Dont. Say.

US News is using my definition, so...

We were talking about the DOT Fiduciary rule not whether an individual advisor can technically call themselves a fiduciary.

The Fiduciary rule required that retirement accounts be fee based only because they had to follow FINRA's best practices for standards of conduct for acting as a fiduciary. This is roughly outlined in that same article:

• Be a fiduciary at all times
  
• Put agreements and disclosures in writing
  
• Show clients what they pay and if the firm receives fees from third parties for their recommendations
  
• Doggedly avoid conflicts of interest – or mitigate them
  
• Be fee-only; avoid commissions
  
• Have baseline knowledge, education and competence
  
• Use an investment policy statement that, at a minimum, expresses assumptions about objectives, risk and performance
  
• Minimize investment expenses
  

The article also states that if you want to make sure you have an advisor who truly acts as a fiduciary, that they also follow these same standards.

Also, there is only one definition of a commission in the financial industry which is outlined in FINRA regulations. Implying that there can be different ways to use the term just further shows your ignorance on the subject.

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US News is using my definition, so...

We were talking about the DOT Fiduciary rule not whether an individual advisor can technically call themselves a fiduciary.

The Fiduciary rule required that retirement accounts be fee based only because they had to follow FINRA's best practices for standards of conduct for acting as a fiduciary. This is roughly outlined in that same article:

• Be a fiduciary at all times
  
• Put agreements and disclosures in writing
  
• Show clients what they pay and if the firm receives fees from third parties for their recommendations
  
• Doggedly avoid conflicts of interest – or mitigate them
  
• Be fee-only; avoid commissions
  
• Have baseline knowledge, education and competence
  
• Use an investment policy statement that, at a minimum, expresses assumptions about objectives, risk and performance
  
• Minimize investment expenses
  

The article also states that if you want to make sure you have an advisor who truly acts as a fiduciary, that they also follow these same standards.

Also, there is only one definition of a commission in the financial industry which is outlined in FINRA regulations. Implying that there can be different ways to use the term just further shows your ignorance on the subject.

---

“An empty vessel makes the loudest sound, so they that have the least wit are the greatest babblers.”. - Plato

US News is using my definition, so...

We were talking about the DOT Fiduciary rule not whether an individual advisor can technically call themselves a fiduciary.

The Fiduciary rule required that retirement accounts be fee based only because they had to follow FINRA's best practices for standards of conduct for acting as a fiduciary. This is roughly outlined in that same article:

• Be a fiduciary at all times
  
• Put agreements and disclosures in writing
  
• Show clients what they pay and if the firm receives fees from third parties for their recommendations
  
• Doggedly avoid conflicts of interest – or mitigate them
  
• Be fee-only; avoid commissions
  
• Have baseline knowledge, education and competence
  
• Use an investment policy statement that, at a minimum, expresses assumptions about objectives, risk and performance
  
• Minimize investment expenses
  

The article also states that if you want to make sure you have an advisor who truly acts as a fiduciary, that they also follow these same standards.

Also, there is only one definition of a commission in the financial industry which is outlined in FINRA regulations. Implying that there can be different ways to use the term just further shows your ignorance on the subject.

Fee-based means you accept some commissions, but most of your compensation is fees.
Fee-only means you do not accept commissions at all.

If you were fee-based and disclosed your commissions, you wouldn't have needed to have your clients sign a form.  You could have still called yourself a fiduciary.

So what was the problem then? 
You weren't fee-based? Or did you not want to disclose what you receive from third parties?

---

My fellow southpaw Mark Brunell will probably always be my favorite Jaguar.

We were talking about the DOT Fiduciary rule not whether an individual advisor can technically call themselves a fiduciary.

The Fiduciary rule required that retirement accounts be fee based only because they had to follow FINRA's best practices for standards of conduct for acting as a fiduciary. This is roughly outlined in that same article:

• Be a fiduciary at all times
  
• Put agreements and disclosures in writing
  
• Show clients what they pay and if the firm receives fees from third parties for their recommendations
  
• Doggedly avoid conflicts of interest – or mitigate them
  
• Be fee-only; avoid commissions
  
• Have baseline knowledge, education and competence
  
• Use an investment policy statement that, at a minimum, expresses assumptions about objectives, risk and performance
  
• Minimize investment expenses
  

The article also states that if you want to make sure you have an advisor who truly acts as a fiduciary, that they also follow these same standards.

Also, there is only one definition of a commission in the financial industry which is outlined in FINRA regulations. Implying that there can be different ways to use the term just further shows your ignorance on the subject.

Fee-based means you accept some commissions, but most of your compensation is fees.
Fee-only means you do not accept commissions at all.

If you were fee-based and disclosed your commissions, you wouldn't have needed to have your clients sign a form.  You could have still called yourself a fiduciary.

So what was the problem then? 
You weren't fee-based? Or did you not want to disclose what you receive from third parties?

Because the DOL fiduciary rule required a client sign a form that would allow commissions to be charged. Why can't you understand that concept?

I can't believe I am arguing financial management with a guy who talks about "impersonal" mutual funds and then his explanation only shows that he doesn't even actually understand what a mutual fund is.

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Fee-based means you accept some commissions, but most of your compensation is fees.
Fee-only means you do not accept commissions at all.

If you were fee-based and disclosed your commissions, you wouldn't have needed to have your clients sign a form.  You could have still called yourself a fiduciary.

So what was the problem then? 
You weren't fee-based? Or did you not want to disclose what you receive from third parties?

Because the DOL fiduciary rule required a client sign a form that would allow commissions to be charged. Why can't you understand that concept?

I can't believe I am arguing financial management with a guy who talks about "impersonal" mutual funds and then his explanation only shows that he doesn't even actually understand what a mutual fund is.

Gotta defend your profession, man.
I took a different set of classes in college.
My profession (engineering) is also misunderstood by the public. And by my co-workers!

I never claimed to know your terms of art.  But I can detect inconsistent statements.  So can most people.

If you're disclosing your commissions to clients anyways, why is it any obstacle to ask the client to sign off that they saw the disclosure?

I get that the decision about how to deal with the new rule was made above your pay grade.  I don't get why you feel a need to defend it.

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My fellow southpaw Mark Brunell will probably always be my favorite Jaguar.

Fee-based means you accept some commissions, but most of your compensation is fees.
Fee-only means you do not accept commissions at all.

If you were fee-based and disclosed your commissions, you wouldn't have needed to have your clients sign a form.  You could have still called yourself a fiduciary.

So what was the problem then? 
You weren't fee-based? Or did you not want to disclose what you receive from third parties?

Because the DOL fiduciary rule required a client sign a form that would allow commissions to be charged. Why can't you understand that concept?

I can't believe I am arguing financial management with a guy who talks about "impersonal" mutual funds and then his explanation only shows that he doesn't even actually understand what a mutual fund is.

I think he's asking about commissions that investment advisors receive from third parties and do not disclose to their clients.  

I see it everywhere.  For example, Merrill Lynch advised someone I know to buy General Motors bonds.  I read the prospectus for those bonds, and Merrill Lynch was underwriting those bonds, and they had an agreement with GM that they would market the bonds.  But they didn't disclose that fact to the client.  I really like Merrill Lynch and the services they provide their clients, although I do not use them myself.  I am educated enough to be self-directed.  But shouldn't they be required to disclose that they are being paid to push those bonds?  

The company I worked for had a 401k plan, and we had an independent advisor helping us run the plan.  He did not disclose that the plan he advised us to use was paying him commissions to push their plan, until I asked him directly whether this was the case.  He was under no requirement to tell us.  

Another thing I really hate about investment advisors is when they charge a percentage, like 1%.  That is a total ripoff.  Over a long period of time, that investment adviser will be taking about a fifth of your returns.  I know a person who has an investment adviser who charges that 1%, and in his case, that means he's paying this guy many tens of thousands of dollars a year to handle his money.  Managing money is not so hard that it's worth $100,000 PER YEAR for someone to manage it.  It's a ripoff.  

There are a lot of good investment advisers out there, but there are also a lot of parasites, and they prey on the ignorant.

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Because the DOL fiduciary rule required a client sign a form that would allow commissions to be charged. Why can't you understand that concept?

I can't believe I am arguing financial management with a guy who talks about "impersonal" mutual funds and then his explanation only shows that he doesn't even actually understand what a mutual fund is.

Gotta defend your profession, man.
I took a different set of classes in college.
My profession (engineering) is also misunderstood by the public. And by my co-workers!

I never claimed to know your terms of art.  But I can detect inconsistent statements.  So can most people.

If you're disclosing your commissions to clients anyways, why is it any obstacle to ask the client to sign off that they saw the disclosure?

I get that the decision about how to deal with the new rule was made above your pay grade.  I don't get why you feel a need to defend it.

When you open an advised account you are required to sign and return a Client Management Agreement that discloses fees and commissions. We can not make any investments in the account until the signed form is returned.

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Because the DOL fiduciary rule required a client sign a form that would allow commissions to be charged. Why can't you understand that concept?

I can't believe I am arguing financial management with a guy who talks about "impersonal" mutual funds and then his explanation only shows that he doesn't even actually understand what a mutual fund is.

I think he's asking about commissions that investment advisors receive from third parties and do not disclose to their clients.  

I see it everywhere.  For example, Merrill Lynch advised someone I know to buy General Motors bonds.  I read the prospectus for those bonds, and Merrill Lynch was underwriting those bonds, and they had an agreement with GM that they would market the bonds.  But they didn't disclose that fact to the client.  I really like Merrill Lynch and the services they provide their clients, although I do not use them myself.  I am educated enough to be self-directed.  But shouldn't they be required to disclose that they are being paid to push those bonds?  

The company I worked for had a 401k plan, and we had an independent advisor helping us run the plan.  He did not disclose that the plan he advised us to use was paying him commissions to push their plan, until I asked him directly whether this was the case.  He was under no requirement to tell us.  

Another thing I really hate about investment advisors is when they charge a percentage, like 1%.  That is a total ripoff.  Over a long period of time, that investment adviser will be taking about a fifth of your returns.  I know a person who has an investment adviser who charges that 1%, and in his case, that means he's paying this guy many tens of thousands of dollars a year to handle his money.  Managing money is not so hard that it's worth $100,000 PER YEAR for someone to manage it.  It's a ripoff.  

There are a lot of good investment advisers out there, but there are also a lot of parasites, and they prey on the ignorant.

Firms are required to disclose that information. Either the person you know didn't remember getting it, or the advisor made a mistake. All trades are reviewed by supervision and if proper disclosures aren't documented by the advisor, they will break the trade and the advisor will be required to contact the client to give proper disclosure, and if breaking the trade puts the client at a loss, then the firm will be legally required to eat that loss. It's possible the advisor went back and added the disclosure to his notes to cover his [BLEEP].

I'm not sure what disclosures a 401(k) plan administrator is supposed to disclose, but if you thought violating regulations, then you should of reported him to FINRA. If he violated regulations, he could be fined and possibly stripped of his license and be unable to work in the industry again.

Some people think that a highly skilled professional should work for them for free. If 1% is too high for them, then they can chose self direct and make their own investment or change advisors, but an unskilled investor won't know how to properly diversify or allocate his portfolio. If trying to manage it themselves decreases the returns by half, that 1% suddenly becomes well worth the price. Investing may not seem hard to you, but to most people (like our engineering friend that doesn't understand what a mutual fund is) it's Greek.

Car salesmen can make 6 figures. Real estate agents can make 6 figures. Financial advising is a professional job that requires far more education and training in specialized skills than either of those positions, yet they aren't supposed to be able to earn 6 figures when they are helping their book of clients earn far more than the advisor makes?

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To be honest, I don't believe their is a requirement to disclose that you were the underwriter of a bond once it's traded on the secondary market. The underwriter makes no extra money after the IPO so there is no conflict of interest. If it's bought as an IPO, then a prospectus must be sent to the potential buyers before the purchase disclosing the underwriter. As far as marketing the bond, they do that before the IPO in order to find out the features and coupon rate required to sell the bonds at face value. If you mean they are the market maker for the company on an exchange, meaning they collect the spread on the bid ask, there is no requirement to disclose that.

You do have to give a disclosure on selling stock of companies that are financially affiliated with your firm.

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Gotta defend your profession, man.
I took a different set of classes in college.
My profession (engineering) is also misunderstood by the public. And by my co-workers!

I never claimed to know your terms of art.  But I can detect inconsistent statements.  So can most people.

If you're disclosing your commissions to clients anyways, why is it any obstacle to ask the client to sign off that they saw the disclosure?

I get that the decision about how to deal with the new rule was made above your pay grade.  I don't get why you feel a need to defend it.

When you open an advised account you are required to sign and return a Client Management Agreement that discloses fees and commissions. We can not make any investments in the account until the signed form is returned.

So what changed about that under the rule that Obama enforced on 2016?

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My fellow southpaw Mark Brunell will probably always be my favorite Jaguar.

(like our engineering friend that doesn't understand what a mutual fund is) 

I know exactly what a mutual fund is.
A broker creates a fund, invites you to invest in it, and he puts your money into a mixture of stocks and bonds that he chooses. 
You might know that guy personally, but more often, you do not.
Or, you may be advised, personally, by another person who works for the broker or accepts a commission from that broker to invest in that fund.  Such advice may or may not be in your best interest.  Hence the problem.

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My fellow southpaw Mark Brunell will probably always be my favorite Jaguar.

(like our engineering friend that doesn't understand what a mutual fund is) 

I know exactly what a mutual fund is.
A broker creates a fund, invites you to invest in it, and he puts your money into a mixture of stocks and bonds that he chooses. 
You might know that guy personally, but more often, you do not.
Or, you may be advised, personally, by another person who works for the broker or accepts a commission from that broker to invest in that fund.  Such advice may or may not be in your best interest.  Hence the problem.

Lol!

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