Posts by Bonk

2024 2015 – PIABA – Testimony – Joseph C. Peiffer – 30p

• 2024 0215 – GOV (House) – Protecting American Savers and Retirees from DOL’s Regulatory Overreach, Bob Good (R-VA)
  • [PDF-, VIDEO-YouTube-02:06:21]
  • edworkforce.house.gov/calendar/eventsingle.aspx?EventID=410108
  • 2024 0215 – PIABA – Testimony – Joseph C. Peiffer, President, Public Investors Advocate Bar Association  —  [BonkNote]  —  30p

•  1 – At the beginning of my career, I represented hundreds of Exxon retirees. We tried a very long, hard fought case for 32 of these retirees. They were all chemical and refinery plant workers. Good, solid men and women, who were hard-working, remarkable Americans. They were told by the advisor that they should retire early, roll their 401(k) accounts over to the advisor’s care, and that they could withdraw 10-14% of their money every year with nothing to worry about.
  • But, in the trial of the case, the advisor and his firm said he just had the duty of a salesman.
  • The fact of the matter is that these folks did the right thing. They went to an advisor, who held himself out as an expert and told them that he had their best interest at heart. Their advisor did not. And when called to account for his behavior, their advisor argued he had no duty to put their interest in a long and happy retirement ahead of his interest in making huge commissions.
• Department of Labor Retirement Security Rule (“DOL Rule”) would settle the duty that advisors have when dealing with retirement money.
• p2 – The Scope of the Conflicted-Advice Problem is Huge and Getting Bigger
  • These costs are particularly acute when retirees roll over their employer 401(k) plan to an individual retirement account (“IRA”) because advice related to one-time rollovers is exempt from ERISA’s fiduciary obligations. This problem is compounded by the fact that advice to 401(k) sponsors and advice regarding the sale of fixed-indexed annuities and certain other non-securities is also not covered by ERISA’s protections.
• p2 – How the DOL Rule Helps Mainstreet Investors
  • As it stands, financial advisors who sell would-be retirees on either liquidating or rolling over their 401(k)s into complex financial products are not always held to a fiduciary standard. ⁶
    • ⁶ 2024 0102 – Letter – CFP to DOL- CFP Board, Letter to DOL Assistant Secretary Gomez re: DOL’s Retirement Security Rule (Jan. 2, 2024), at 4.- 1210-AC02 – 15p
  • p3 – The DOL Rule would put investors’ interest first by requiring advice on the roll-over or liquidation of a 401(k) to be up to ERISA standards, which is a fiduciary standard. This change is long overdue.
  • Morningstar
  • The DOL Rule doesn’t just help investors. It also helps ethical advisors. As the AARP says the decision to roll over a 401(k) is “often the single most important financial decision a plan participant makes, involving a lifetime of retirement savings and the fact [is] that these recommendations carry with them an inherent conflict of interest.”¹⁰ The DOL Rule closes this loophole.
• p4 – Retirees in Every State and District Have Been Harmed by Conflicted Advice
  • Behind the huge numbers illustrating the problem are real people, who have been severely impacted by the current lack of a fiduciary requirement. These people exist throughout the United States, in every state, and in every congressional district. I have gathered some examples below.
  • Some of these folks were represented by my office and others were represented by PIABA members.
  • “IRA Reboot” – These investors, the vast majority of whom were either retired or in their 60s, were told they should undergo an “IRA Reboot” that would “turbocharge their IRA” or “turbocharge their 401(k)” by liquidating their retirement account and purchasing a complex insurance product along with premium financing. Many of our Utah clients were also advised that in addition to liquidating their 401(k)s, they should mortgage their homes.
    • They were lured in by “seminars” that purported to give objective, fiduciary advice, but in reality, were just sales sessions used by these advisors, sometimes called “Wealth Architects,” to line their pockets with huge commissions. It is telling that while the marketing material to my clients talked about “turbocharging their 401(k)s” the marketing material aimed at the advisors talked about “turbocharging [the agent’s] commission.
    • All suffered a loss of dignity and trust.
      • ⇒  I have attached a small sample of the impact on some these clients in their own words as Exhibit “A” to this testimony.
• p5 – The DOL Rule Brings Regulation into Line with Investor Expectations 
  • All of my clients over my nearly 25 years of experience, like nearly all investors, thought that their advisors were their fiduciaries. This is not unusual.
    • According to the Certified Financial Planner Board of Standards (“CFP Board”), a nonprofit organization that sets and upholds standards for financial planners, investors now overwhelmingly expect that financial professionals always provide them advice in the investors’ best interests.¹¹ Several studies that illustrate this trend; for example, the Center for Capital Markets Competitiveness indicated 97% of investors already believed their financial professionals had their best interests in mind, and a recent AARP study revealed 89% of investors over the age of 50 felt the same.¹²
  • Investors’ beliefs that their financial professional have their best interest in mind is due at least in part to these advisors and their trade associations marketing that way. Investment professionals routinely use titles, such as “financial advisors,” “financial consultants,” or “wealth managers,” or even “wealth architects.” I have never heard a financial professional refer to themselves simply as a salesman.
  • Here is a sample of what investment professionals, firms and their trade associations say now to position themselves as providing advice that is in investors’ best interest:
    • NAIFA, Red Bird Advisor, The Insurance Pro Shop, F&G, NationWide, The Standard, SuccessCE, Brighthouse, New York Life
    • Yet, when we attempt to make advisors account for the advice that investors liquidate or roll over their retirement accounts, the advisors and the companies they work for claimed that these advisors owed these investors no duty for the advice. The DOL Rule would simply bring the legal standard up to the standard that nearly all investors expect when dealing with a financial professional in their retirement account.
• (p7) – The DOL Rule will Close the Disclaimer Loophole
• (p8) – Small Savers will be Helped, not Harmed, by The DOL Rule
• (p8) – The DOL Rule Provides Investors Protection that Reg BI does not. 
  • First, the SEC’s Reg. BI does not apply to advice to purchase anything other than securities.
    • This excludes investments such as certain insurance products, bank products, commodities, real estate and cryptocurrency. These are large and emerging areas of investments that are still subject to conflicted advice without the DOL Rule.
• (p9) – The NAIC Standard is Best Interest in Name Only
• (p10) – Exhibit “A”
  • Dolores – IRA – Minnesota Life – Gold Star
  • John – [Bonk: No Specific Information] 
  • Michael – 2 PacLife Policies
    • The bogus Pac Life accounts will set me back quite a few years unless money is recovered. Right now, I have $181,000 into both of these policies and was recently told by the company that since last year was a bad stock year and they only yielded 1% the accounts will be broke in 7 years.
  • Elizabeth – Not Life Insurance
  • Earl – 
  • Bobby
  • Alan – IUL – FIP – 
  • Diane
  • Paul and Susan – PacLife – FIP – 
  • Mary – 
  • Jerome
  • Jane
  • Stanley – IUL – FIP
  • Debra
  • Devon Jr & Barbara – IUL – Minnesota Life 
  • Glenn & Gudrun – IUL – FIP – 
  • Kurt – Minnesota Life – FIP – Tax-Free Income – We did not need Life insurance
  • Dennis – 
  • Christine
  • Debbie
  • Steven – IUL – Minnesota Life – Gold Star – FIP
  • Suzanne
  • Florence – [IUL] – Pacific Life – FIP
  • Thomas
  • David – IUL – tax free for retirement – 
  • Robert – IUL – Tax-Free Income
  • Frederick
  • Dennis & Maxine – IUL – FIP
  • David – IUL – 
  • Virginia
  • Vandy – 
  • Kelley
  • Samuel
  • Sara
  • Pam
  • Robert
  • Walter
  • William – IUL – FIP –
  • Jeffrey
  • Gloria – IUL