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"Too big to ...", Continuing the "new era" thread

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Re: "Too big to ...", Continuing the "new era" thread

Postby psu_dad » Sat Feb 04, 2017 1:44 pm

... when a financial advisor pitches a corporate retiree to roll his $100,000 401(k) balance into an IRA at the adviser’s firm or recommends a particular global-stock mutual fund for another saver’s account, those investors might indeed assume that pro is suggesting what he or she believes is best for the investors’ financial health.

Not even for two seconds.

"Who put this thing together? Me, that's who! Who do I trust? Me, that's who!" -- Tony Montana.

--------------------------------------------------

That is implied in how most financial firms present themselves and their employees to consumers: Those workers are typically called “financial advisors” and presented as being there to help you achieve your goals, even when their job may be technically to represent the securities firm as a salesperson (technically called a registered representative).

Well, then consumers need to be seriously disabused of that thinking. It's dangerous, with or without Dodd-Frank. Don't listen to car salesmen, either, BTW. It's your money. Do your own homework. Or hire someone who doesn't sell a financial product (other than advice). For the life of me, I don't understand why a class on personal finance isn't mandatory for graduating from HS. It would be infinitely more valuable than half the crap taught in HS.
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Re: "Too big to ...", Continuing the "new era" thread

Postby Blue&White » Sat Feb 04, 2017 1:49 pm

These people market themselves as advisors, not sales people. They put together all kinds of slick marketing materials and spend a lot of money convincing people they are on "your" side when they are not. You are an educated man and have a lot more knowledge about this stuff than the average person. What this ruling says is "we know that financial firms are going to completely screw people, and we really don't care".

Btw, this "do your own research" response is ridiculous. If you are a victim of medical malpractice, we don't tell you "well, you should have gone to medical school so it's your own damn fault". Why is it we can expect some paid experts to work for our interests but not others? That makes zero sense to me.
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Re: "Too big to ...", Continuing the "new era" thread

Postby psu_dad » Sat Feb 04, 2017 2:05 pm

Btw, this "do your own research" response is ridiculous.

So is your analogy. Doctors take a vow to look after the best interests of their patients. And if/when they don't follow accepted procedures, an attorney is lurking to drop a house on them. The rapacious assclowns at JPMorgan don't take any vows or face such scrutiny.

If doing your own research is beyond you, fine. Keep it simple. But don't invest your money in anything too complicated for you to understand. And don't rely on a salesman to look after your best interests. Ever. My father didn't even graduate from HS and he never got f***ed over by a banker. Why is that?
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Re: "Too big to ...", Continuing the "new era" thread

Postby Blue&White » Sat Feb 04, 2017 3:55 pm

The idea that a doctor has some greater duty is a completely artificial construct and exists only because society decides it exists. And, keep in mind that we actually have a debate in this country about rights to health care You've made the point several times that you believe individual cost of premiums is more important that universal coverage. So, what duty does a doctor have to a patient that can't afford his services? What is to stop society from saying that a doctor no longer has to take a vow and will be accountable for not acting in the patients best interest?

If medicine seems an uncomfortable comparison, then let's pick another. How about lawyers. When you hire a lawyer, that lawyer has an ethical, and legal, obligation to put your interest over theirs. And, that means consumers of legal services aren't always given all the available options that are possible. Lawyers are held back from offering everything they can. And, the reason is those options may benefit the lawyer and not the client, or benefit the lawyer at the expense of the client. A lawyer who does that can lose his license to practice law and be sued by his clients.

The rules are govern both doctors and lawyers are man made. They are not laws of nature. They exist because, at some point in time, society decided that we are all collectively better off if these professions have certain duties to their clientele. There is no reason at all that financial advisors can't also be given a greater duty than they traditionally have. The only reason they aren't is because they don't want it, and Mr. "drain the swamp" has waded right into the middle of the muck and given them a seat at the table. Despite what that asshat said about "consumer choice", there is no consumer benefit here. None.

As for why your father never got f***ed over by a banker, that's a bit like asking Col. Jessup why Santiago wasn't packed. How should I know? Maybe your dad had a pension and never invested. Maybe he passed away before financial services companies came up with all these new equities and derivatives they used to screw so many of their clients. I'm an educated man, but I can't comment intelligently on the investing habits of the last psu_granddad.
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Re: "Too big to ...", Continuing the "new era" thread

Postby psu_dad » Sat Feb 04, 2017 4:49 pm

The rules are govern both doctors and lawyers are man made. They are not laws of nature. They exist because, at some point in time, society decided that we are all collectively better off if these professions have certain duties to their clientele.

But it's also because government has historically considered public health and legal services to be part of their mission. I's why we have municipal and state hospitals and health departments. It's why if you cannot afford one, an attorney will be provided to you. In a nation of laws, you can't properly exercise all your rights without access to legal representation.

Financial services are somewhat different. Historically, if you were content to place your money in the Hooterville Bank, then you had government programs like FDIC to offer you some protection. But if you wanted to dabble in the stock market or pork belly futures, you were pretty much on your own. If I get sick, I HAVE to go to a doctor (or perish). If I get arrested, I HAVE to have legal representation (or go to jail). I don't HAVE to have a stock portfolio. Most people don't.

There is no reason at all that financial advisors can't also be given a greater duty than they traditionally have. The only reason they aren't is because they don't want it.


Exactly. Which should set off fire alarms off in the head of anyone dealing with them. And for the record, I have no heartburn with forcing greater duty upon them. What set me off is that I hate the notion that "Hey, without Dodd-Frank, people who offer financial services can screw you!". They can totally screw you WITH it, too. And I have zero problem with the aspects of Dodd-Frank intended to eliminate "too big to fail" (not that they accomplished this). I just don't want ANYONE thinking the government is ever going to protect you from getting hosed by Wall Steet weasels. They're not.
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Re: "Too big to ...", Continuing the "new era" thread

Postby Blue&White » Sat Feb 04, 2017 6:55 pm

But it's also because government has historically considered public health and legal services to be part of their mission.

That's sort of my point. It's an artificial construct because, at some point, society decided it was in our collective best interest. And, financial independence of its citizenry should also be part of governments mission. You can't lament people not putting away enough for their own retirement and complain about the socialism of social security and then go and make it easier for professional sharks to screw people out of their money.

There is no other industry where this would be tolerated. We don't necessarily impose fiduciary duties all over the place, but we equally allow for some consumer protection. We don't let car dealers sell lemons to the public. We don't let auto mechanics just pretend to find things wrong with your car and charge you for nothing. Sure, it may happen, but a mechanic who gets caught faces consequences. And, we also don't allow these people to market themselves as if they are part of your team and working for your best interest. With a car salesman, there is no expectation that he's working for you. With a financial advisor, there is.

Finally, regarding the point about your father, no offense but it's a ridiculous comment. I have no idea exactly how long ago your father passed, but the world has changed a lot. If you ever read Michael Lewis' book Liar's Poker from the 80s, he talks about the evolution of Wall Street and how they came up with the first mortgage backed securities. I seriously doubt your father had to contend with the complicated investments getting pushed these days. Slick bankers didn't screw your dad with this bull Emmert because they didn't have it to sell. Now they do. And, it's not reasonable to tell average investors they need to go do research and get educated when the fact is sophisticated institutional investors can't always tell what they have. AIG had 85% of their exposure in something that generated 10% of their risk. They had no clue what they were sitting on. None of them did.

It's pretty hard to spin the idea that consumers are somehow better off if their financial managers don't have to be honest with them. You wouldn't think that would even be in question, and yet.....
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Re: "Too big to ...", Continuing the "new era" thread

Postby psu_dad » Sat Feb 04, 2017 8:02 pm

I seriously doubt your father had to contend with the complicated investments getting pushed these days.

No one does. There's plenty of bread & butter investment opportunities out there. I've been with Fidelity for 40 years and they've never "pushed" anything on me. I've never even asked them for advice. They don't manage my money. They manage funds. And I select the ones I want. And if I don't understand them, I don't select them. There are plenty of conservative mutual funds available, in both equities and bonds. You don't have to let a-hole brokers push "complicated" investments on you. I'm more worried about them screwing around and bringing the whole damn system down again, than I am about my individual investments. If the Democrats want to fight for Dodd-Frank to prevent THAT from happening, fine. Great. I don't need/want them to protect me from a sale pitch I'm not going to listen to anyways.

I'm sure I'm the "problem" in this debate. For the life of me, I just don't understand why anyone would trust someone else to invest their money when that someone has a vested interest in where/how it's invested and how often it's moved around. Makes me crazy. I'd bury mine in the back yard before I'd do that. If you want to let your pension fund manager deal with it, or a trusted non-profit like TIAA-CREF, fine. But a broker?
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Re: "Too big to ...", Continuing the "new era" thread

Postby Blue&White » Sun Feb 05, 2017 3:41 pm

I'm more worried about them screwing around and bringing the whole damn system down again, than I am about my individual investments.

Well, "too big to fail" banks are even bigger than they were than prior to the crash and all his advisors on finance and economics come from Goldman, sooooo ....... good luck with that.
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Re: "Too big to ...", Continuing the "new era" thread

Postby Blue&White » Sun Apr 02, 2017 7:30 pm

"Franz Kafka lives… he works at Bank of America."

I've seen a few versions of this story going around. Time has a story on it. So does Fox Business News and CNN Money. But, none of them go into the details about what these people put up with like this one does. It's pretty amazing.

Btw, the claim that the Bank deliberately gave them bad advice to force them into foreclosure is an old story at this point. There are thousands of people who were told by a number of Banks that they should default on their mortgage because then they could get a modification, and then found the Banks saying "just kidding" and then destroyed people and declared foreclosure. It took a year or so before the courts even cared or would accept testimony about how these people found themselves in that condition.

This is really egregious. I hope this stands and they have to pay every single penny of the damages.
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Re: "Too big to ...", Continuing the "new era" thread

Postby Blue&White » Tue Apr 04, 2017 4:53 pm

Speaking of a new era, did anyone else see that Tesla's market cap now exceeds that of GM and they are the most valuable automaker in the country? Think about that: Tesla, who sells ~100,000 vehicles a year now has a market cap that exceeds GMs, who sells closer to 1,000,000 vehicles a year (I think it's closer to 900,000, but, still).

That is mind boggling.
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