356
VIEWS
0
COMMENTS
 
SHARES
About this iReport
  • Not verified by CNN

  • Click to view ChuckBoyce's profile
    Posted February 28, 2015 by
    ChuckBoyce
    Location
    Cary, North Carolina

    More from ChuckBoyce

    Top Financial Advisor, Peter J. D'Arruda Critiques President's Proposal on Retirement Advisors

     

    Financial Safari Radio Talk Show Host Peter J.
    D’Arruda Believes That The Devil Is In The Details

     

    On Feb. 23, President Barack Obama told the AARP that he asked the U.S. Department of Labor to “update the rules and requirements that retirement advisors put the best interests of their clients above their own financial interests.”

     

    In his speech in Washington, D.C., Obama told the AARP, which was previously known as the American Association of Retired Persons, that changes in the rules and requirements for retirement advisors was essential because the current rules and requirements were written in the 1970s.

     

    “Most workers with a retirement plan had traditional pensions, and IRAs were brand new, and 401ks didn’t even exist,” Obama told the AARP, which supports changes in the rules. “So it's not surprising that the rules that existed 40 years ago haven't caught up to the realities of most families today.”

     

    Nationally syndicated radio talk show host Peter J. D’Arruda listened to Obama’s approximately 2,300-word speech and concluded that he couldn’t support or oppose the president’s proposal because the speech lacked details.

     

    Basically, “Coach Pete,” as he is known to the people who have listened to his Financial Safari show, told his audience that Obama’s proposal should be judged by the Department of Labor’s new law rather than the speech. Obama did not provide a timeline for when he wants the new law to go into effect.

     

    “As with any political speech, we need to also see what's in the final details because political speeches are a dime a dozen,” Coach Pete told his audience. “The final law is the most important thing and as it related to the investor, there have been rules in place for decades.”

     

    Coach Pete’s Financial Safari radio show is broadcast on more than 100 stations nationally. D’Arruda was named the host of the show because of his decades of experience as an investment advisor. Since 1992, he has been the owner of Capital Financial Advisory Group, LLC. He has also written three financial books.

     

    Retirement investment is one of many fields that Coach Pete has expertise in.

     

    Obama said the lack of uniform rules in retirement investment has been financially harmful to millions of American families and there need to be better rules to “require retirement advisors to act in the best interest of their clients.” He claimed that many financial advisors persuade their clients to make bad investments because they are paid by the companies they are recommending. He cited a study by Harvard and MIT that concluded that retirement advisors recommend higher-fee investment funds approximately seven times more often than they recommend the lowest-fee funds

     

    Obama said many of these fees are hidden. Coach Pete agreed. He said that hidden fees can take 1 to 4 percent of the money out of an investor’s account and estimated that some people lose “hundreds of thousands of dollars” because of hidden fees. However, he said a new law that addressed the hidden fees would be ineffective unless it focused on the areas where they are prevalent, including 401K retirement plans, mutual funds, and variable annuities.

     

    If the government does not address the hidden fees in the 401k plans,  the variable annuities and mutual funds, the back fees that no one sees, that are really costing people, tens of thousands, if not hundreds of thousands of dollars in their future retirement plans, then the law is useless,” Coach Pete said.

     

    Coach Pete is very concerned about the fact that many Americans are uneducated about the difference between the kinds of professionals that advise people how to invest for their retirement. He said that he hopes the new law will address their needs, but fears that it will instead “hurt the little guy” because overregulation often helps big banks and big financial institutions that lobby the government to make sure that new regulations benefit them.

     

    “I fear that, like with most rules, that the government will hurt the small guy, the small investment advisor, the small planner, instead of hurting the big guys, instead of helping the consumer,” he said.

     

    However, Coach Pete said a new law could be effective if it helps Americans understand the difference between investment advisors, insurance agents and financial advisors. Investment advisors have higher professional standards, he said.

     

    “If this law does anything close to educating the consumer about the differences between the advisors out there, it will be a good law,” he said.

    Add your Story Add your Story