Major brokerage firms and insurance companies are deliberately misleading consumers and collecting billions in unnecessary fees.
People living in different geographic locations can have a spirited debate regarding President Trump’s Orwellian vision of America.
Something that is beyond debate is the financial landscape many consumers find themselves in is a dystopian hell hole of conflicts of interests and expensive, unnecessary products.
The Consumer Federation of America came out with a damning report on 25 major brokerage firms and insurance companies:
“Twenty-five top U.S. brokerage firms and insurance companies present their employees as trusted financial advisors putting client interests first even as their lobbyists argue in court that they are nothing more than commission-driven salespeople.”
This scathing report notes how these companies give their salespeople titles to mislead consumers into thinking they are working with a trusted advisor, instead of someone who is just selling a product.
Instead of labeling their employees financial salespeople, these firms use the terms, “Financial Advisor,”” Financial Consultant,” “Chartered Wealth Advisor,” “Retirement Consultant,” “Retirement Counselor,” or “Wealth Manager,” according to the report.
These terms will lead consumers to believe that the salespeople have a high level of technical knowledge of financial planning. They consistently use the terms “advice” and “planning” in their marketing materials and prospect meetings.
In fact, the salespeople that use this deception are purely focused on selling products for commissions and other rewards.
These terms and titles give many unsophisticated investors the idea that the salesperson will be looking out for their best interests, which is clearly not the case.
Even worse, these firms have stated in court that they are not looking out for their clients’ best interests. These testimonies are on record and were part of an attempt by the firms to block proposed regulations being put upon them.
Barbara Roper, CFA’s director of investor protection, said: “It comes down to this: are they financial advisors or are they just salespeople? Put another way, are they lying to the court, or are they lying to their customers?”
It has been estimated that consumers pay an extra $17 BILLION a year in unnecessary investment fees. This is, in effect, a monstrous tax on ordinary Americans who are trying to save for retirement.
We are very sensitive to this misleading marketing. Teachers’ non-ERISA 403(b) retirement plans are the poster child for this type of misleading and intentionally deceptive marketing.
When we speak to teachers, they are shocked to hear that their “financial advisor” is just an annuity salesperson whose sole motivation is to collect their 5-10% commission and move onto their next victim.
This dark landscape is the reality for millions of public school teachers, who have become the victims of these financial predators and their false titles.
Micah Hauptman, CFA’s financial counsel, summed up the situation perfectly when he stated:
“Financial professionals who act like retirement investment advisors should be held to an advice-based standard, and that’s what the DOL rule does. Firms are sorely mistaken if they think they can continue the current charade in which they act like advisors to their customers, while relying on their trade associations to argue the opposite in court in order to try to kill the DOL rule. People saving for retirement deserve to know where their advisor and the firm that their advisor works for stands on this issue.”
Somebody needs to make a President Trump-like “Investor First” speech on the state of the financial services industry.
This would be one place where few would disagree regarding the “carnage” facing millions of Americans trying to save for retirement.