NO recommendations in IRAs?
How do you Jonesies feel about the new ruling that we can no longer provide advice/recommendations in IRAs?
Compliance says that from now on we must provide at least two options, educate the clients fully about each and then insist that they choose the investments they want in their portfolios. We can no longer tell them which stock, bond, mutual fund, annuity, etc., we believe is best for them--they must choose. Several vets in my region have already said they're considering resigning. Jones says it's an industry-wide issue based on a 1974 ERISA fiduciary ruling, but I've heard the "it's an industry-wide thing" many times before from Jones that later turned out to be untrue. This is going to get interesting...People are mad because you have to give the clients a choice? Do you have any idea how much easier it is to close a sale if the client is the one who chooses?
I haven’t heard anything about this. (I’m assuming you mean client 401ks when you say IRAs).
Anyway, isn’t this a non-issue in a real world situation? You describe the funds, extol the virtues of target funds, tell them what’s best for them … and then leave it there. Usually by the time in the relationship where they are showing you the 401k they will do whatever you want, or maybe they just do want some Morningstar reports to make up their own mind.
This sort of reminds me of the compliance officer who asked if I was telling my prospects that I could win a diversification trip if they opened a $50 a month Roth IRA with me.
I think it’s regarding 401K’s. And this has always been the case since ERISA. I think they are just reiterating it. Just do what you normally do. Hopefully you already knew that you have to tread a little lightly with 401K advice.
Borker, I think the “several vets are considering resigning” line is a bunch of horseshit.
This is the problem with this forum. You post that you can’t make IRA recomendations and that people may resign. Did you do your homework before posting? I am a former Jones guy and remember being told this info about clients 401ks because you don’t want to become a fiduciary by giving advice on an acct you do not hold. Where did you hear guys are going to quit over this? People, this site is supposed to get info out. If you put info in here, don’t just make stuff up so can read your own post over and over. Get a clue and think before you post, don’t just sell American Funds.
I guess I could use the “quote” feature and reply individually to each of you, but I’ll save time and space by saying this:
1. I did not mean 401(k)s, I meant IRAs. 2. Several vets in my region have already said they're considering resigning over the recent ruling by Jones's legal department. 3. I realize there has always been a fiduciary issue with 401(k)s. 4. Again, I said IRAs, and I meant IRAs. If you're at Jones, you'll realize very soon that I'm not making this up. The information from my first post regarding the recent ruling is nearly verbatim from a Jones Field Supervision Director.Borker, do us a favor. You let us when one of your vets resigns because of this.
There is a proposal tool at UBS that automatically generates 3 alternative proposals and includes them in an appendix. But only when the proposal is for IRA accounts. I always assumed it was a ploy to dilute FA loyalty but maybe there is some creepy ERISA thing lurking.
For example, if we're going to suggest mutual funds, we have to give the client at least two families to choose from. If we choose Hartford and American, we have to educate the client about both fund families and have them pick one. If they say they don't know which family to choose, we have to tell them it's up to them to make the decision.
Once they've chosen their fund family, we have to put together at least two different portfolios that we deem suitable for them, and again they must choose. If they ask us which option we'd recommend--because "that's what they pay us for"--we must tell them we cannot make a recommendation and that they must choose the portfolio they want. The same thing goes for bonds, stocks, annuities, etc. We must provide at least two choices of each investment and let the client pick. The new policy goes far beyond just asking whether a person wants a 15 year Equity Indexed Annuity or a 20 year Equity Indexed Annuity, but as always, Hank, your comments are greatly appreciated.Let them choose between any two AF’s, they are all basically the same. On a more serious note, IF what you are saying Borker is true, that is very stupid and I understand your frustration.
wow
Imagine going to the Dr. and they say – "I need you to pick what kind of medicine you should take!"
thats sad if the compliance dept says that.
I’m not frustrated…actually more amused than anything.
Jones says it's an industry-wide issue, implying that other firms will soon be implementing this policy. Time will tell.Whenever Jones told me “it is industry wide” i knew they were full of crap… If it was they would cite a reference…
If this is true for Jones, they are going to be the laughing stock of everybody... including Primerica.. which is sad... glad I am gone... On a side note my old region has had 4 people leave in the last month with 3 more planning on leaving within the next month(that I know of)...Here is two choices for you.
1: Borker is the biggest idiot on this forum. 2: People that buy into his crap and respond as if it is true are the biggest idiots on this forum. Now there's a couple of choices any client would have problems figuring out without our help.Borker, Tell us where on the system it tells us we have to do this.
The ruling should have printed in your office on Wednesday, 1/28.
You probably glanced at it like I did--although many in my region said they never saw it--and thought it was just a reminder of fiduciary issues associated with giving adivce in 401(k)s. I gave it no attention until my FSD explained Jones's position on it in detail. If you'll search for ERISA and IRA, you can read the frequently asked questions about it.Here it is....Oh yeah, I'm resigning. I'm done.
Explain Your Role, and Theirs: Explain to clients that your role is to help them determine how their available funds should be invested and to identify the types of investments or portfolios that match their investment needs. It is their role to make the decisions, with the assistance of the information you provide. Give The Client Choices: Provide each client with at least two appropriate choices of investment options that match his or her portfolio objective or the objective identified for the individual transaction. Empower Clients: Educate clients on how to think about and make their retirement choices. Utilize available tools to demonstrate proper asset allocation, determine risk tolerance and provide information clients need to decide which investment(s) best fit their personal situation. Ensure that the ultimate investment decisions are made by the clients, not you. Complete the Required Forms: Ensure that each retirement plan or IRA owner has opened an Edward Jones account for each plan and executed all required Edward Jones account documents. Do not agree in writing or otherwise to be a fiduciary for any client account.Borker, I'm not sure if you're making some big deal about this just to be anti-Jones, or if you are seriously concerned over it. I bet if you look at the Compliance manual for every other brokerage firm, there is language similar to this. And FYI, this does not apply to advisory accounts (SMA's and MF advisory).
I’m not really concerned with who believes it’s a big deal and who doesn’t, and I’m not being anti-Jones. I’m just relating the things I heard during the initial explanation of Jones’s new position on the issue by Compliance.
I read the FAQs and thought it was really no big deal, until I heard Compliance go into detail about how it's going to change the way we work with clients. I couldn't care less what you do. My primary question is whether other firms will require adherence to this policy the way we at Jones are about to be required to. And you're correct, if you can stick to the advisory account and MAP, you'll be completely unaffected by this.I think you’re making a mountain out of a mole hill. And there’s not a vet that wasn’t already planning on leaving that would leave over this.
If this were really a big deal, we would have received wires, emails, calls from our compliance liasons, received info at our regional events, etc until we all understood it. Kind of like when Advisory Solutions came out. Do you remember all the hype around that launch? This was a one page letter from compliance putting the info out there, my guess here, simply to satisfy the regulators. How many fspends have you received when you opened up a new IRA account and invested money in CAIBX? Did your FSD ask if you had presented ABALX or AMECX too? No. Did you have to have the client sign off on something that said you showed them two annuity policies before they signed on the dotted line? No. You're making way too much out of this. Just get back to talking with clients and educating them on investing. In a normal conversation like that, you'll more than likely satisfy the requirements.OK, I spoke wth my FSD. Here are his exact words (more or less):
"It's not anything new. The law has been around since ERISA was enacted in the 70's. We were just throwing it out there to remind people of the law. But nothing is really changing. The IRS is coming down harder on this topic, so we wanted to make sure people understood it. The bottom line is to make sure you are not forcing your clients into certain invstments, but at least showing them that there are different alternatives for their situation, based on their needs, and that the decision is ultimately up to the client what they choose. We need to make sure clients understand that they were not forced into just one investment option for their IRA or 401K. Most FA's I have spoken with have siad that this is really not a big deal - most FA's talk to their clients about different options, and then tell the client what their recommendation would be." Now, obviously, each FSD is an individual, and each interpret things and administer thigns differently. But based on my conversation, it doesn't sound like I need to change a single thing with how I currently do business.[quote=B24]OK, I spoke wth my FSD. Here are his exact words (more or less):
"It's not anything new. The law has been around since ERISA was enacted in the 70's. We were just throwing it out there to remind people of the law. But nothing is really changing. The IRS is coming down harder on this topic, so we wanted to make sure people understood it. The bottom line is to make sure you are not forcing your clients into certain invstments, but at least showing them that there are different alternatives for their situation, based on their needs, and that the decision is ultimately up to the client what they choose. We need to make sure clients understand that they were not forced into just one investment option for their IRA or 401K. Most FA's I have spoken with have siad that this is really not a big deal - most FA's talk to their clients about different options, and then tell the client what their recommendation would be." Now, obviously, each FSD is an individual, and each interpret things and administer thigns differently. But based on my conversation, it doesn't sound like I need to change a single thing with how I currently do business.[/quote] So your FSD said that we can continue to talk to our clients about different options and then tell the client what our recommendation would be? My FSD said that we are explicitly precluded from making any recommendations in IRAs going forward.Bottom line, it sounds like typical compliance advice inconsistencies. One compliance person will give one interpretation that sounds reasonable and another compliance person with “small member syndrome” will make a huge mountain of the same issue. What Borker says sounds ridiculous. What B24 says sounds reasonable. I have no doubt that both are telling the truth. That’s just how maddeningly inconsistent compliance advice is. In the past 3.5 years of independence, I’ve had at least two issues that I can think of where two different compliance people gave me two completely different answers to the exact same question. That’s just another example about why reps hate the business prevention department.
[quote=Borker Boy][quote=B24]OK, I spoke wth my FSD. Here are his exact words (more or less):
"It's not anything new. The law has been around since ERISA was enacted in the 70's. We were just throwing it out there to remind people of the law. But nothing is really changing. The IRS is coming down harder on this topic, so we wanted to make sure people understood it. The bottom line is to make sure you are not forcing your clients into certain invstments, but at least showing them that there are different alternatives for their situation, based on their needs, and that the decision is ultimately up to the client what they choose. We need to make sure clients understand that they were not forced into just one investment option for their IRA or 401K. Most FA's I have spoken with have siad that this is really not a big deal - most FA's talk to their clients about different options, and then tell the client what their recommendation would be." Now, obviously, each FSD is an individual, and each interpret things and administer thigns differently. But based on my conversation, it doesn't sound like I need to change a single thing with how I currently do business.[/quote] So your FSD said that we can continue to talk to our clients about different options and then tell the client what our recommendation would be? My FSD said that we are explicitly precluded from making any recommendations in IRAs going forward. [/quote] Yes, that's what he said. We can give clients options (as most of us do), and tell them which option we would recommend, but that it is ultimately up to them. The way I normally handle most clients is (after getting to know their situation) recommend different portfolios based on how much risk they are willing to take. Here's the potential upside and downside. We can even protect and insure some of the income (i.e. annuities). I will tell them "knowing what I know about you and your situation, this is what I would suggest, but if you are more comfortable doing this or that, then we can do it that way." Borker, my guess is that most people are doing something along these lines, not just cramming one portfolio down people's throats. My opinion is that your guy is covering his own tracks so that if he runs into problems with one of his FA's, he can say "well this is what I told them....". It was funny, my FSD seemed very un-moved by me asking the question. He seemed to be implying that this was more of a cover-your-bases memo than anything. Like Spiff said, if it was some big deal, we would have had all kinds of bells and whistles going off. I didn't hear a single thing about it until you brought it up. He also told me that as far as he knows, there is no plans for any further communications, and no need for written documentation from clients.Why would you offer the client a choice? By the time you are recommending a particular investment, you should know that client's financial situation (and their financial goals) inside and out. Thus there should not be two "good" choices, but ONE appropriate choice. Why would I let a client pick a substandard choice?
I don't want a doctor to offer me two types of pills, and then ask me to make the choice. I want him to evaluate me and prescribe me the best possible choice.I don’t think it’s a matter of giving them a substandard option. It is a matter of giving them two different cars in which to drive. Whichever one they choose is up to them. I believe, unlike with religion, that there are many paths to the same goal. It could be as simple as telling the client that I believe they should be investing in Hartford Funds. Now, they can choose to do that inside a VA with some guarantees or just in funds without the guarantees but with lower expenses. It’s up to them.
I agree that Borker's FSD is either playing CYA or is one of those that just likes to make our lives as miserable as possible. I think I'd call another one and find out if you get the same story. Or shoot them a suggbox wire and see if they respond. Actually, I like it when my doctor tells me about different medications. For instance, I used to take two different medications, but the last time I was in for a checkup he said they now make one that will cover both symptoms. He said he was happy with my results using what I was using, but it might be a little easier just to take the one. I appreciate that I have options, but it's up to me whether I want to take them or not.[quote=iceco1d][quote=now_indy]
Why would you offer the client a choice? By the time you are recommending a particular investment, you should know that client's financial situation (and their financial goals) inside and out. Thus there should not be two "good" choices, but ONE appropriate choice. Why would I let a client pick a substandard choice?
I don't want a doctor to offer me two types of pills, and then ask me to make the choice. I want him to evaluate me and prescribe me the best possible choice. [/quote] +1 x 1,000[/quote] If you look at it from the FINRA side of things, even if you know your clients better than anyone else and you've done your homework, I think you might be setting yourself up for some big arbitration hearings if you only give them one investment option. Ice, if your client someday files a complaint against you with FINRA that says you didn't work in their best interest because you only told them to invest in ETFs or indexes, but their neighbor invested in a VA, what defense do you have? Or what if you run a C share biz and the client wants to take you to arbitration because he thinks he's paying you too much. I promise you (been there) that FINRA will ask you why you did AND didn't offer this or that. You are absolutely right on KYC. You should know them before you make recommendation. But you put yourself at a much greater risk when you only talk about one thing with a client.I thought Borker was full of crap…called FSD and she said that we can NEVER, NEVER, NEVER make recommendations to clients in ira’s…we can present 2 or more options when it comes to fund families, funds, bonds, stocks, stocks vs bonds etc… but if client asks what they should do, we have to inform them that we are unable to tell them what they should do…sounds like we are working for fidelity. Been with Jones for 10+ years and have been considering leaving anyway, guess this seals the deal…have a couple buddies that this will push over the edge as well
what pisses me off the most is that they've allowed this info to simply "trickle" out to advisors hoping to stagger the backlash that is coming their way....this is major....we can no longer advise clients in their qualified accounts with Jones[quote=anotherstuckdrone]I thought Borker was full of crap…called FSD and she said that we can NEVER, NEVER, NEVER make recommendations to clients in ira’s…we can present 2 or more options when it comes to fund families, funds, bonds, stocks, stocks vs bonds etc… but if client asks what they should do, we have to inform them that we are unable to tell them what they should do…sounds like we are working for fidelity. Been with Jones for 10+ years and have been considering leaving anyway, guess this seals the deal…have a couple buddies that this will push over the edge as well
what pisses me off the most is that they've allowed this info to simply "trickle" out to advisors hoping to stagger the backlash that is coming their way....this is major....we can no longer advise clients in their qualified accounts with Jones[/quote] You're lying.......Spears.If this really were a big deal we wouldn’t all be wondering whether it is a big deal or not. We would know, with absolute certaintly, that we are to “NEVER, NEVER, NEVER make recommendations to clients in ira’s.”
And if this really is a big deal, leaving Jones for LPL or RJ won't solve the problem. Jones is reacting to an ERISA rule that has been in existence for years. And they aren't really reacting all that much, at least not so much that we should have spent this much time on it. LPL or RJ or the bank, wherever you think you might jump to, aren't excluded from having to follow ERISA rules. So, if you really are a 10 year Jones vet and this is the thing that drives you indy, good luck with your new endeavor.[quote=Spaceman Spiff]If this really were a big deal we wouldn’t all be wondering whether it is a big deal or not. We would know, with absolute certaintly, that we are to “NEVER, NEVER, NEVER make recommendations to clients in ira’s.”
And if this really is a big deal, leaving Jones for LPL or RJ won't solve the problem. Jones is reacting to an ERISA rule that has been in existence for years. And they aren't really reacting all that much, at least not so much that we should have spent this much time on it. LPL or RJ or the bank, wherever you think you might jump to, aren't excluded from having to follow ERISA rules. So, if you really are a 10 year Jones vet and this is the thing that drives you indy, good luck with your new endeavor. [/quote]Call me a cynic, but I think they're putting it in your procedures so they can leave you out to dry if/when the occasional arbitration comes up...other firms are probably doing this too and we just don't know it yet.
Just put all your clients in “Putnam Built for Balance” portfolio, Edwards and Jones loves it.
[quote=HymanRoth] [quote=Spaceman Spiff]If this really were a big deal we wouldn’t all be wondering whether it is a big deal or not. We would know, with absolute certaintly, that we are to “NEVER, NEVER, NEVER make recommendations to clients in ira’s.”
And if this really is a big deal, leaving Jones for LPL or RJ won't solve the problem. Jones is reacting to an ERISA rule that has been in existence for years. And they aren't really reacting all that much, at least not so much that we should have spent this much time on it. LPL or RJ or the bank, wherever you think you might jump to, aren't excluded from having to follow ERISA rules. So, if you really are a 10 year Jones vet and this is the thing that drives you indy, good luck with your new endeavor. [/quote]Call me a cynic, but I think they're putting it in your procedures so they can leave you out to dry if/when the occasional arbitration comes up...other firms are probably doing this too and we just don't know it yet.
[/quote] You may be correct. My guess would be an auditor read the compliance manual and found that it wasn't spelled out well enough, so as a result they had to put it in there and make a show of letting us know it's there now. Satisfy the regulators and play a little CYA at the same time. But since there has been no other official communication from the home office about it, I'm assuming it's not as big of an issue as Borker and that last guy are making it out to be.
They do? Is that why we kicked Putnam out of our program and have a SELL recommendation on their funds?
Sorry, Jones dropped Putnam from the preferred status a couple of years ago and stopped following them altogether last year. If I remember correctly, those portfolios didn't do all that bad from a performance standpoint.Just put all your clients in “Putnam Built for Balance” portfolio, Edwards and Jones loves it.
Putnam the best!
Sorry, Jones dropped Putnam from the preferred status a couple of years ago and stopped following them altogether last year. If I remember correctly, those portfolios didn't do all that bad from a performance standpoint. [/quote] Are you freakin serious? Not all that bad? Compared to what...the other six "preferred" fund families?[quote=outofjail]Just put all your clients in “Putnam Built for Balance” portfolio, Edwards and Jones loves it.
Now all you Jonies can go back and sell the Putnam and put your client's in another "preferred" family for 5.75%...great for the client!!!!They do? Is that why we kicked Putnam out of our program and have a SELL recommendation on their funds?
Just put them in Putnam they are the best…
Sorry, Jones dropped Putnam from the preferred status a couple of years ago and stopped following them altogether last year. If I remember correctly, those portfolios didn't do all that bad from a performance standpoint. [/quote] Are you freakin serious? Not all that bad? Compared to what...the other six "preferred" fund families?[/quote] My apologies. I haven't looked at or sold any Putnam funds for a while. Even when they were still a part of the preferred list. But, I do remember looking at the built for balance portfolio a few years ago and thinking that it wasn't horrible. It wasn't good enough for me to use, but it wasn't the worst I'd seen.[quote=Spaceman Spiff][quote=outofjail]Just put all your clients in “Putnam Built for Balance” portfolio, Edwards and Jones loves it.
Sorry, Jones dropped Putnam from the preferred status a couple of years ago and stopped following them altogether last year. If I remember correctly, those portfolios didn't do all that bad from a performance standpoint. [/quote] Are you freakin serious? Not all that bad? Compared to what...the other six "preferred" fund families?[/quote] My apologies. I haven't looked at or sold any Putnam funds for a while. Even when they were still a part of the preferred list. But, I do remember looking at the built for balance portfolio a few years ago and thinking that it wasn't horrible. It wasn't good enough for me to use, but it wasn't the worst I'd seen. [/quote] Man you smart Spiff![quote=Gone Indy][quote=Spaceman Spiff][quote=outofjail]Just put all your clients in “Putnam Built for Balance” portfolio, Edwards and Jones loves it.
outofjail,
Please go back to jail. thank you.Now all you Jonies can go back and sell the Putnam and put your client's in another "preferred" family for 5.75%...great for the client!!!![/quote] Never sold Putnam. Never would.[quote=B24]They do? Is that why we kicked Putnam out of our program and have a SELL recommendation on their funds?
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