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Bloomberg: Firms May Drop Millions of IRA Savers on Rule Change, Sifma Says
It so much sounds like the investment adviser industry is either filled with less than fully competent people (who genuinely couldn't identify the "best" investment for their clients, but could at least pick some out that are "suitable") and is fearful of fiduciary liability, or simply wants to keep hidden from its clients what the full charges are.
There's nothing about fiduciary duty that precludes an adviser from agreeing with a client that the IRA client will pay a floor of $X/year; if the commissions don't generate that, then the client will be assessed the difference. It sounds like the industry is saying that it cannot maintain small accounts if advisers are precluded by fiduciary duty from churning the accounts or going after the highest commission investments. Well, just write the fee into the service agreement. Could it be that they're not only making enough on the small accounts to keep them profitable, but gouging above that threshold, and that's what they want to preserve?
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There's nothing about fiduciary duty that precludes an adviser from agreeing with a client that the IRA client will pay a floor of $X/year; if the commissions don't generate that, then the client will be assessed the difference. It sounds like the industry is saying that it cannot maintain small accounts if advisers are precluded by fiduciary duty from churning the accounts or going after the highest commission investments. Well, just write the fee into the service agreement. Could it be that they're not only making enough on the small accounts to keep them profitable, but gouging above that threshold, and that's what they want to preserve?