The head of a high-profile broker-dealer became uncharacteristically upset soon after the passage of Dodd-Frank a few years back because of the law’s broad brush, which he said unfairly painted his reps .
He had a point—the specter of Rich Uncle Pennybags and his fat cat friends smoking cigars and laughing maniacally at the high rate of return gleaned from the exploitation of others is too easy to conjure, especially in an election year. “Taking on Wall Street” too often ensnares retirement advisors on Main Street, those active in their communities who possess honesty and integrity and are guilty of nothing more than shepherding their friends and neighbors through to an affordable quality of life in retirement.
It’s why populist political headlines about who attacked whom over close ties to big banks cause such commotion; it’s clear they have no idea what they’re talking about and view the issue through a subjective (and unfocused) lens. It’s also why arguments over the DOL’s fiduciary rule have become such a cluster.
More regulations mean more costs—period. They might be offset by the benefits gained, but the notion of an honest CBA on financial issues is about as antiquated as an abacus. Put simply, legislators and regulators engage in the same financial malfeasance of which they accuse others. The result is that they harm the very people they claim to help.
A piece on Vox.com (hat tip to Alison Hawkins of the Financial Services Roundtable) in the wake of the billion dollar Powerball bonanza is about what you’d expect from a millennial-powered website that broke with The Washington Post because it found its lefty credentials lacking. One section of the story, however, found that a significant portion of the populace feels Powerball is the only way to accumulate a significant amount of wealth (read that again, we’ll wait). A third of young people believe they’ll never have enough to retire, and the lottery is their only shot. As one mathematician noted, they’re more likely to get hit by lighting on a sunny summer day without a cloud in the sky.
The tragedy is that the demographic most down on their retirement prospects is the one with the most time, and therefore best chance, to succeed. They’re also the demographic most likely to swallow the politicos’ cynical message, and yet somehow it’s Wall Street that needs fixing.