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Fuduciary Duty Goes Prime Time

John Oliver’s criticism – fiduciary duty goes prime time

Recent ‘Last Week Tonight’ segment is just one example of the growing awareness of this issue

Investment News, Mark Schoeff Jr. reported on June 19, 2016 – For the last six years, the debate over a Labor Department regulation to raise investment advice standards for retirement accounts has been conducted mostly among regulators, lawmakers, industry officials and financial advisers.

Now the people the regulation targets — investors — are getting into the conversation.

The process of taking fiduciary duty to Main Street was boosted by a segment on the HBO comedy program “Last Week Tonight with John Oliver.” Mr. Oliver applied his signature brand of mordant satire to a topic mostly discussed — and fiercely contested — in technical terms by industry insiders.

Previously, the topic had been considered too complicated or boring for the average person to understand. But that might be changing. Charles Schwab announced last week that it was launching a major advertising campaign on fiduciary aimed at investors, the first of what could be many such campaigns over the next year. The topic is also increasingly being addressed in general interest newspapers such as the Minneapolis Star Tribune and The New York Times.

On his program, which aired June 12, Mr. Oliver used humor to lambaste what he called hidden charges embedded in a 401(k) plan the production company for his show negotiated with insurer John Hancock, a spokeswoman for whom denied that it was leveling excessive fees. He also highlighted how high fees can eat away at retirement savings. Hitting the same talking points the Obama administration has used to promote the DOL rule, which would require financial advisers to act in the best interests of their clients, Mr. Oliver made the case for fiduciary duty with a common touch usually lacking in presentations by government and industry.

The profile of the topic was enhanced not just by exposure on HBO but through the millions of hits the segment has received on YouTube — and its ripple effects.

“I think the John Oliver video has been a true tipping point,” said David Siegel, CEO of Investopedia, an online financial-information resource for investors.

Last Monday, the day after the HBO broadcast, Investopedia experienced a significant increase in the number of page views for articles about fiduciary duty and fees. For instance, an article entitled “An introduction to fiduciary advisors” received 256 page views, up from an average of 15 over the prior week.
“The increase in demand has been maintained,” Mr. Siegel said.

ADVOCATES THRILLED

Advocates for higher standards for investment advice are thrilled.

“John Oliver is the greatest thing that has ever happened to the fiduciary cause,” said Randy Bruns, a private wealth adviser at HighPoint Planning Partners. “It’s wrapping entertainment around it. It’s wrapping humor around it.”

The ad campaign launched by Charles Schwab’s custody unit, Schwab Advisor Services, is touting the virtues of financial advisers who put their clients’ interests ahead of their own. The campaign will include videos and will appear on social media, paid search channels and online media sites including the Wall Street Journal, Barron’s, Forbes, The Economist, CNNMoney, MarktWatch and Business Insider.

Other companies and organizations also considering public campaigns around RIAs and fiduciaries include TD Ameritrade, the National Association of Personal Financial Advisors and the Investment Advisor Association.

The topic also is making its way into general interest media. Rep. Tammy Duckworth, D-Ill., wrote an op-ed supporting the DOL rule in a recent edition of The New York Times. She highlighted the example of constituents who have been hurt by conflicted advice in a piece headlined “Isn’t honesty the best policy?” Read More>

 

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