The industry complained adopting a universal fiduciary standard would cost investors but failed to provide the smoking gun. Meanwhile, an independent research study just did, but found the gun pointing the other way.
I saw a melodrama over the weekend at the local community theater. If you don't know melodramas, they can be described as containing: A) A hero you cheer for; B) A villain you boo at; and C) An awful lot of bad puns and sophomoric humor. In the latter category falls the running gag in this particular script. Throughout the play, a character would innocently enter and interrupt another character by politely saying, "Excuse me." The interrupted character would instantly reply, "Why? Did you do something?"
For those not familiar with sophomoric humor, this joke falls under the category of "It was the dog" and that's as far as I'm going to go to explain this.
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On the other hand, blaming the dog is a convenient strategy for many guilty parties. In fact, when you've just committed an act not accepted in polite society, one of the best defenses is to go on the offense and blame someone else of the very same act. Politicians are particularly adept at this sort of twisted rhetoric. It turns out, political advocates in the finance industry display equal agility.
When the SEC first proposed its uniform fiduciary standard, the vendors most harmed by it didn't cry for themselves, the cried for their clients. "Oh, the humanity! Oh, the increased costs to investors!" they wailed to every available ear. And in a rare display of bipartisan initiative, both the left ear and the right ear listened and, in unison, echoed the same "concerns." The SEC conceded, delaying implementation of the uniform fiduciary standard and asked the industry to delineate the costs. The industry never did.
In a strange twist of fate, a recently released independent study suggests, in fact, it is the very delay that has cost investors plenty. In fact, the cost of this SEC delay is now more than $24 billion – and it continues to climb (see the calculation here: "Study: SEC Fiduciary Delay Costing Retirement Investors $1 Billion per Month," FiduciaryNews.com, Feb. 12, 2013).
At a time when markets are not growing with the celerity we once enjoyed, every penny of retirement savings grows more critical. For the SEC to be wasting dollars – billions of dollars – at this time is reprehensible. It's so reprehensible; I'd call for a Congressional hearing on the matter except Congress is just as responsible for the delay as the SEC. Why, I bet if you asked the SEC why they delayed the fiduciary standard, they'd blame it on the dog, as in "watchdog," as in Congress.
But, haven't we had enough of blaming in Washington? Isn't it time to buckle up and get the job done?
There's a new sheriff in town at the SEC (or soon will be). Perhaps Mary Jo White can finally turn off the spigot of wasted retirement savings and give investors a real chance to earn what they need to live a fulfilling, comfortable and successful retirement.
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Christopher Carosa
Chris Carosa has been writing a weekly article and monthly column for BenefitsPRO online and BenefitsPRO Magazine since 2011 and is a nationally recognized award-winning writer, researcher and speaker. He’s written seven books, including From Cradle to Retire: The Child IRA; Hey! What’s My Number? – How to Increase the Odds You Will Retire in Comfort; A Pizza The Action: Everything I Ever Learned About Business I Learned By Working in a Pizza Stand at the Erie County Fair; and the widely acclaimed 401(k) Fiduciary Solutions. Carosa is also Chief Contributing Editor of the authoritative trade journal FiduciaryNews.com and publisher of the Mendon-Honeoye Falls-Lima Sentinel, a weekly community newspaper he founded in 1989. Currently serving as President of the National Society of Newspaper Columnists and with more than 1,000 articles published in various publications, he appears regularly in the national media. A “parallel” entrepreneur, he actively runs a handful of businesses, including a small boutique investment adviser, providing hands-on experience for his writing. A trained astrophysicist, he also holds an MBA and has been designated a Certified Trust and Financial Advisor. Share your thoughts and story ideas with him through Facebook (https://www.facebook.com/christophercarosa/)and Twitter (https://twitter.com/ChrisCarosa).
