SkyBridge’s Scaramucci Slams Fiduciary Rule, Elizabeth Warren

Makes sound retirement advice "harder to get, more expensive"

He listed four effects the new rule will likely have on investors.He listed four effects the new rule will likely have on investors.

It’s safe to say “The Mooch” doesn’t think much of Elizabeth Warren.

“She’s the one person in Washington who can cost between 0.5 percent and 1 percent of GDP growth,” says Anthony Scaramucci, the controversial founder of SkyBridge Capital and big-time Trump backer.

When asked to quantify the claim Scaramucci, host of Wall Street Week on Fox Business Network, argued “she doesn’t have any real world experience running a business, but she has a very successful populist message that she’s deriving power from. It will damage the very people she’s claiming to help.”

If she attacks banks and the banking system, and implements regulation that make it harder for them to lend to small businesses (considered the underpinnings of the U.S. economy), it hobbles growth.

“She can single-handedly do enough damage to literally regress growth in the United States.”

Calling it a “love letter” to Warren, Scaramucci took to the pages of the pages of The Wall Street Journal last week to criticize the DOL’s 401k fiduciary rule.

Writing it will one day “serve as a case study in government overreach,” Scaramucci added that putting the word fiduciary in the title was “a clever rhetorical trick.”

“How could someone oppose a rule requiring financial advisors to act in the best interests of clients?” he argued. “The problem is the new rule doesn’t actually protect investors. It makes sound retirement advice harder to get and more expensive.”

He noted that plaintiffs including the U.S. Chamber of Commerce have filed six separate lawsuits to prevent the new regulation from taking effect.

“They argue the rule would expose financial advisers to significantly higher regulatory costs and litigation risks while preventing small account holders from getting good, affordable advice.”

He then listed four “undesirable effects” the new rule will likely have on investors and advisors:

  1. Push investors excessively into passive index funds. “The investment advisor’s job is to create a long-term asset allocation mix for clients producing the highest possible risk-adjusted return—and the new fiduciary rule prevents him from doing that job effectively.”
  2. Cost investors more money.“Like many federal regulations, the new fiduciary rule will hurt the very people it purports to protect.”
  3. Punish small and independent registered investment advisers, or RIAs.“Dodd-Frank was supposed to end ‘too-big-to-fail,’ but instead unduly punished small community banks, which couldn’t afford significantly higher compliance costs …The new fiduciary rule will have the same effect on retirement planning.”
  4. Punish small savers.“The increased threat of litigation over commission-based accounts will cause most advisors to switch to fee-based systems that don’t make economic sense for accounts with low balances.”

He concluded by quoting economist Milton Friedman, “One of the great mistakes is to judge policies and programs by their intentions rather than their results,” and compared the fiduciary rule to the Community Reinvestment Act of 1977, which many see as a contributing factor in the housing and banking crisis in 2008.

2 Comments on "SkyBridge’s Scaramucci Slams Fiduciary Rule, Elizabeth Warren"

  1. Respectfully, this doesn’t make any sense to me. You can still pick active funds within 401(k) plans, just have an IPS and good reasoning behind it. For fiduciaries, this doesn’t cost anymore money so there will be no additional costs passed onto clients. How does this cost investors more money? Why would this punish smaller RIAs? RIAs are fiduciaries as it is and should have sound compliance regulations in place. Smaller investors can go to robo platforms or advisors willing to take them on in a fee-based capacity and not be sold A or C share mutual funds that they will never stay in for long periods of time anyway. This may also reduce the chances of them being sold annuities or cash value life insurance policies. Fiduciaries do their job and take the blame if they mess up. I think this is a good thing and will get rid of a lot of the nonsense going on within the financial advisory world.

  2. Daniel McConlogue | November 8, 2016 at 3:04 pm | Reply

    Its always amazing to me to watch someone with a dying business model try to defend the indefensible. More harm has been done to investors by product sales people with no statutory requirement to act ONLY in the clients best interest than any other facet of ‘investing.’
    How can you be alive in this day and age and not know this – is beyond me.

Leave a comment

Your email address will not be published.