Top 10 Rebuttals of Bank Lobbyists, and What They Really Mean

Wesley Gray |

Letterman.jpgIt’s Tough to be a Wall Street Financial Advisor These Days…

On April 14th, Departmtent of Labor (DOL) Secretary Tom Perez issued a press release outlining the DOL’s intent to ensure the “fiduciary” standard applies when advisers give advice to retirement plans. This means that broker/dealer banks, branded as RIAs (think big bank wirehouse advisors) would no longer be permitted to sell high fee, complex instruments, unless they were in the BEST interest of the client (which is rare).

We expect Wall Street lobbying firms to vigorously oppose this measure, but DOL has already set up the PR machine to make their case.

To help level the playing field, we've developed a simple, easy-to-use translation guide that can help investors understand the common phrases that bank lobbyists will be discussing in the coming weeks. So without further adieu, taking up the mantle of the soon-to-retire David Letterman, we offer the Top Ten Phrases from Bank Lobbyists... Translated for Better Understanding:

1) What They Say: This new standard will limit investors’ choice of retirement options.

What They Mean:

This new standard will definitely limit my choice of yachts.

2) What They Say: Investors who “go it alone” will screw up their asset allocation.

What They Mean:

Without this huge source of profit, my Wolf of Wall Street theme party will have a totally inadequate seafood buffet.

3) What They Say: Rather than provide advice, advisors will sit on their hands for fear of legal reprisals associated with a fiduciary standard.

What They Mean:

Shhh. Don’t tell anyone there is a robust independent advisor ecosystem already available in the economy.

4) What They Say: These rules will inhibit new, innovative products from being introduced to the marketplace.

What They Mean:

Thse rules will inhibit new, highly profitable and poor performing products will not be introduced to the marketplace.

5) What They Say: It’s not about the price you pay, it's about the value you receive.

What They Mean:

It’s not about the price they pay, it’s about the soft dollars, revenue shares, and kickbacks we receive.

6) What They Say: Our legislative partners stand ready to protect investors and the middle class.

What They Mean:

We have taken every Congressman out for a lovely steak dinner and we will continue to do so.

7) What They Say: We have the best facilities in the world for providing cutting edge research and leading market insights.

What They Mean:

We pay the highest rent in Manhattan and hired a bunch of busted PhD students who can write fancy equations.

8) What They Say: Our robust RIA network fully leverages our economies of scale to provide superior service.

What They Mean:

We send our RIAs canned reports and shoddy back office services and charge them 50% of their revenues.

9) What They Say: We have been in the business for centuries.

What They Mean:

We have been exploiting clients for centuries.

10) What They Say: Our clients see the value we provide. They understand that we are well worth the price.

What They Mean:

Please don’t go to Vanguard. Please don’t go to Vanguard. Please don’t go to Vanguard.

 

Written by Pat Cleary

 

For more from Wesley Gray and his investing and finance team, check out their blog at Alpha Architect.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

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