THE Trump administration recently announced that it intends to review,
and presumably overturn, the Obama-era fiduciary duty rule that is
scheduled to take effect in April. The administration’s case was
articulated by Gary Cohn, the new director of the National Economic
Council.
Mr.
Cohn, most recently the president of Goldman Sachs, called it “a bad
rule” and likened it to “putting only healthy food on the menu, because
unhealthy food tastes good but you still shouldn’t eat it because you
might die younger.” Comparing healthy and unhealthy food to healthy and
unhealthy investments is an interesting analogy.
The
now-endangered fiduciary rule is based on a simple — and seemingly
unarguable — principle: that in giving advice to clients with retirement
funds, stockbrokers, registered investment advisers and insurance
agents must act in the best interests of their clients. Honestly, it
seems counterproductive to go to war against such a fundamental
principle. It simply doesn’t seem like a good business practice for Wall
Street to tell its client-investors, “We put your interests second,
after our firm’s, but it’s close.”
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