At a briefing for Senate staff on the importance of unconflicted investment advice, retiree Janice Winston told a personal story that illustrates the need for a strong fiduciary standard.
Hello, my name is Janice Winston. I am here as a retiree to talk about the challenges facing real people.
Let me briefly tell you my story. I worked for 29 years as a telecommunications engineer for Verizon Corporation. In 2002, I retired and received a lump sum from Verizon’s pension plan.
But I quickly learned that figuring out how to invest the lump sum was hard business. I was faced with a range of questions I couldn’t answer. Where do I get investment advice? Whom do I trust? How do I invest the money so that I can have a good quality of life in retirement but not risk running out of money before I die?
After many agonizing days and nights, I picked an investment firm for my lump sum based on various recommendations from friends and relatives. My most important concern was trust, but I thought that anyone I paid to advise me would be guided only by my best interests. This is important, because I really have no good way to evaluate whether my investments are performing well or whether I am paying too much in fees. Imagine my surprise when I learned that my investment adviser was not necessarily required to act in my best interest.
Ron Rhoades, who is an independent financial expert, recently evaluated my portfolio and showed me that I was paying fees that I didn’t know about or understand. And this is not right. I feel betrayed. I worked long and hard to earn a decent retirement, and I should be able to depend on the investment advice given to me.
I know that, when my money was in the Verizon pension plan, it had to be invested solely in my best interest. My question is, how come that same standard doesn’t apply when I took the money as a lump sum? This makes no sense to me at all. Just because my retirement savings are no longer in the Verizon plan does not mean the money should be treated differently. It is still my retirement money.
I also recently heard that the financial industry is arguing that, if investment advisors cannot have conflicts of interest or if they have to put their clients’ interests ahead of maximizing their own fees, then they will simply stop serving lower-income and minority communities. This just seems wrong.
It seems to be that Congress would want the highest protections for all Americans, but, if anything, lower-income people need good advice the most to assure they don’t lose the small amounts of money they’ve saved. Would we use a lower standard to allow doctors to give substandard advice to low-income patients because these communities are medically underserved? The answer is never! Everyone should be entitled to good, unconflicted advice.
Finally, the word “fiduciary” sounds complex but it boils down to a pretty simple concept. When regular people like me are getting advice about our retirement money and other assets, we should be able to depend on our financial advisors acting in our best interests – even if it means that they cannot be paid extra fees. Honestly, I don’t see how anyone can argue differently.
If you don’t protect us? Who will?
If you don’t do it now? When?