Money is an integral part of the world. Since it is such an important aspect, it would do well to know more about it, but many people are lost in the terminology that comes along with finance. I really didn’t know what it was all about, nor was I concerned about it because I figured I wouldn’t have to worry about it for another few years. However, the least we could do is know the terminology so that when the time comes to put it into use or it comes up on the news, we know what they are talking about. John Oliver is good at presenting an issue, explaining why it should concern us, and telling us what can be done about it so we can help ourselves. The review on U.S Pirg over the John Oliver retirement episode, was very informative and was able to walk me through the issues people of retirement age face when being taken advantage by non-fiduciary brokers. They are not told what exactly it is they are investing in and usually what the broker does invest their client’s money in, tends to benefit him/her rather than the clients, gaining commission and splurging. Terms that are important to know are:
- Fiduciary rule: legal term for a broad group of professionals who are required to put customers’ interests first. They cannot accept compensation or payments that would create a conflict of interest (Lee).
- Hedge funds: highly active funds with very high costs
- Index funds: A list of stocks are bought and you receive the average return for that class of stock from that particular index you chose.
- Best Interest Contract Exemption (BICE): a full disclosure contract under the fiduciary rule (Tucker). Ensures that investors know exactly what it is they are investing in.
Lee, K. (2016, June 14). Blog. Retrieved November 09, 2017, from https://uspirg.org/blogs/blog/usp/last-week-tonight-john-oliver-retirement-industry-minefield-here%e2%80%99s-answer
Tucker, P. (n.d.). 4 Arguments Against the Fiduciary Rule Debunked. Retrieved November 09, 2017, from http://www.truemeasureadvisors.com/2016/04/20/20164145-argument-against-the-fiduciary-rule-debunked/
The first article I read was the Crackdown on Cheating Companies. After reading this article it doesn’t surprise me that large companies are misclassifying their employees to save themselves some money. Companies take advantage of full-time employees without actually having to pay or offer benefits that normally would come with being a full-time employee. The next article I read was about student loan debt and how to overcome it. This article was really helpful especially for college students like us who probably all have some sort of loans out that will need to be paid back after graduation. I think it is critical for people to know about the consequences that happen when you ignore your loan payments. Personally I know there have been times in my life where I have ignored responsibilities and it only causes things to get much much worse. That why these tips were helpful! Lastly, I read the article that touched on Debt and Deceased Relatives. This article really surprised me because I honestly thought that when you die, your debt is erased, simply because well, you are dead. Who’s going to pay it? Collecting estate to pay off debt seems reasonable if the person dies, however I think going as far to collecting it from significant others is drastic. I think it’s important to know that debt collectors are only allowed to contact third parties in order to obtain contact information ONCE. Its also important to know that you are legally allowed to have collectors stop contacting you. Just make sure to send that letter and get a return receipt for proof. As a consumer, it gives me hope that there is more investigation being done on companies who are misclassifying their employees. As an employee of a really large company myself, I would have to be taken advantage of by being called a “contractor” when I am still abiding by all company rules and not my own work. I think the first step in solving these problems is creating awareness for the consumers (I did not know about this deception going on, how many others don’t?) The more consumers know about it, the more change can happen. As for policy makers, it sounds like they are headed in the right direction with investigating unlawful companies. Making stricter consequences for companies misclassifying their employees could also aid in solving this issue.
After looking over several resources I found that in financial health and decision-making it is critical to be informed. When we are informed of our choices in their entirety it aids in our ability to make the best choice we see fit in making our final decision. Often times we are bombarded with so much information that is not necessarily so easy to understand especially as a student. It is comforting to know that President Barack Obama’s Presidential Memorandum on Student Aid Bill of Rights puts in place resources and clauses that will better the outcome of students in debt. This not only gives me hope and comfort as a student, but also as a consumer. Now this is only speaking from a student’s experience, but I think there is still a vast amount of work needed to be done by policy makers and consumers in order to solve this loss of communication or understanding in debt. Policy makers need to improve their ability and ways of communicating debt and borrowing policies. In turn consumers also need to be able to understand the language of policy makers in order to improve their ability in making financial health and other life decisions.
Fiduciary Rule: “Fiduciaries is the legal term for a broad group of professionals who are required to put customers’ interests first. They cannot accept compensation or payments that would create a conflict of interest.” (Lee, Kathryn) That quote came directly from the article on U.S. Pirg, written by Ms. Lee about the interview (I am assuming) with John Oliver about retirement and what comes with retirement.
Lets just start with, I know nothing about retirement funds, how to get one, who to talk to, where to start, how to start, what else to do to increase your retirement, nothing. What I do know is, most jobs offer a 401k, it is important to start at a young age, and investing in your future is probably the best thing you can do in your youth.
Okay, so the fiduciary rule now defined by me: Those that are in the financial advisor positions are not out for their best interest, but are out for the best interest of their client. Meaning, they must do what they can to ensure that their client is receiving the best advice and pointed in the best decision making direction specific to their customer (the person receiving the financial help). This is what it means to me, and I gathered that meaning from the article on U.S Pirg, by Kathryn Lee. I felt, compared to the other article about the 4 arguments by Patrick Tucker, Lee did a much better job at defining and applying that definition of the fiduciary rule to the point that an ignorant consumer, like me, was able to come up with their own definition. She did this my specifically defining the word, then going on to explain again what Mr. Oliver was speaking on in his interview. She elaborated on what it means to have high fees and low fees when choosing a retirement plan, what it meant for those who did not have to go by the fiduciary rule, and an actively managed fund. Each of these topics she spoke on were quick, but to the point and it had enough basic information to clearly understand what she was talking about. On the other hand, the article written by Tucker, I had no idea what he was even saying. He was speaking about things I knew nothing about, and didn’t offer very much background knowledge for me to “catch up” to his article. This made is difficult for me to quite understand the fiduciary rule and what these myths meant that he was talking about. This doesn’t mean he had written a bad article, because I am sure to those that knew what he was talking about appreciated the shortness and to the point the article was. Just for me, between the two articles, Ms. Lee did an excellent job on explaining and providing clear understanding for the fiduciary rule, what it meant, and where it applied.
After reading: A Crackdown on Cheating Companies, Debts and Deceased Relatives, and The Top 10 Student Loan Tips for Recent Graduates. I was mainly disappointed in how companies are easily able to misclassify employees in order to save money.
I can kind of relate to this because during my second year of community college, I picked up a ‘full-time’ shift at a Frontier Communications Retail store in sales. I was working at least 30 hours a week but without really any benefits. The reason behind that was because we we’re ‘contractors’ contracted through another company for Frontier. Every month, I would get a $150 stipend for ‘medical expenses’ and sometimes I would get gas mileage refunds for outreach. Since I was getting decent pay in addition to going to college full time, I didn’t really think much of it. After reading this article, I now understand that there is a definite difference between a contractor which is a worker who, while is hired from a company, makes their own schedule and a full-time employee who works at least 30 hours a week but should also be entitled to benefits. I think that it’s important for consumers to understand this difference because for a college student, good pay+commission and a stipend isn’t too shabby but for a parent who’s working hard to make ends meet and with no health insurance benefits or coverage, it can really make a world of a difference.
As a consumer, I’m really glad that the Department of Labor is stepping in to investigate companies that misclassify employees but also knowing that if a close relative, were to die tomorrow (KNOCK ON WOOD), the family members wouldn’t be responsible for their debt, with of course, some exceptions. I’m glad that today you are able to write a letter to a debt collector to stop them from contacting you when before (when we had landlines) they would constantly call over and over and over again. As for student loans, we are lucky to have informational resources like this article on tips for student loans.
I think that enforcing employee classification to limit and even put an end to employee misclassification will take major work by policy makers but also consumers. I think that consumers should be well-informed on their workers’ rights so that big corporate companies are not able to get away with it. As for consumers alone, being informed is major work in my opinion. Informed about student loans if they have any and debts for the deceased so that they are effectively able to make educated decisions.
A Crackdown on Cheating Companies
Debts and Deceased Relatives
The Top 10 Student Loan Tips for Recent Graduates
Personally, both articles were easier to read than I thought they were going to be but for some reason 4 Reasons Against the Fiduciary Rule Debunked was a little easier for me to understand and grasp the concept of what we are supposed to be learning about this week. The Fiduciary Rule is basically all financial advisors helping there clients save money need to have the clients best interest in mind instead of there own.
What I don’t really understand is how someone can be so cruel in there job. No matter what your job is whether it is a teacher, CNA (Certified Nurses Assistant), social worker or even a manager at Walmart, you ALWAYS have someone else best interest in mind because it is part of your job! The second you put yourself first is when you lose your job. How can someone keep there job when they aren’t even doing the main portion of it which is help there client save money.
If I had to chose one of the articles that was easier for the consumer to understand it would be 4 Reasons Against the Fiduciary Rules Debunked because the lay out was easier to read, the main points they wanted to explain were very much in detail with words that were easier to understand and it explained everything as you read along. It was a tad bit longer but only because it had more explanations. I liked both articles and I really like how Last Week Tonight with John Oliver: The Retirement Industry is a Minefield — But Here’s the Answer had five main points at the end that they thought were necessary to include sort of as a reminder.
The site playspent.org is a really good tool for explaining why it is so hard to maintain and save money working poor. I wish I had known about this resource when I was trying to explain to my mother why minimum wage works are not able to properly care for themselves finically. It is my firm belief that if you contribute to a society, in any job, you should be able to afford to live in that society and meet your basic needs.
The distribution of wealth in America is grossly skewed with the top 1% owning 40% of the nation’s wealth (Politizane, 2012). An enlightening YouTube video looking at wealth inequality in America can be found here. Especially when the 2018 budget cuts huge amounts of funding from Medicare and Medicaid.
Higher education serves as another barrier to the poor. Degree earners typically have higher paying jobs but pursuing a degree is expensive in the US. Everyone should have access to higher education if that is their desire. Education should not be limited to the wealthy. The cost of tuition varies based on state residency; the average in-state resident tuition at a public university public is $9,650 and out-of-state students pay an average of $24,930 a year (College Data, 2017.)
As it stands now, one of the only ways for students to finance college is to take out student’s loans. The Obama administration created protections for students taking student loans, as well as increasing the Pell grant. We saw from our reading that in 2013, $28,400 was the average graduates owed banks from student loans. Having an amount like this hanging over your head, simply for getting an education is unacceptable.
I believe that policymakers should consider better funding at all education levels and the possibility of cheaper or free tuition for public universities. I know some schools in states like New York have granted free education for students with family incomes less than 100,000. There are rigid requirements around this funding, but I think it could be a step in the right direction to provide equal access to education.
As consumers, we should push for better education programs from elementary to high school and affordable or free options for higher education. The American education system is in a sad place right now. We should be investing in education rather than crippling people with debt.
College Data. (2017). What’s the Price Tag for a College Education? Retrieved from https://www.collegedata.com/cs/content/content_payarticle_tmpl.jhtml?articleId=10064
Politizan. (2012). Wealth Inequality in American [Video File]. Retrieved from https://www.youtube.com/watch?v=QPKKQnijnsM
The Fiduciary Rule is basically a rule that says financial advisers for retirement have to act in the best interest of their clients because according to the article, it says that it is currently legal for advisers to NOT act in the best interest of their clients because they are not required. So this rule says that they have to act in the best interest of their clients not theirs.
Both of these articles seem to come down on the same side. If you ask which article is better at understanding or explaining from a consumer’s point of view, I would have to say Public Interest Research Group’s tutorial on John Oliver’s Retirement Income episode and the Fiduciary Rule definitely explained it better. Why? Because the article had more details and explained in simpler ways that a consumer can understand; that’s what I think.
I feel that this article Public Interest Research Group’s tutorial on John Oliver’s Retirement Income episode and the Fiduciary Rule explains the material better because the other article was short and did not give much information about the topic. The other article just does not explain fiduciary rule that well in my opinion. Because with the John Oliver’s Retirement Income episode article, there are more information that talks a lot about more things that have to do fiduciary. For instance, it talked more about how a fiduciary person cannot accept compensation because that would basically result in conflicted interest. According to the article, “they can steer you to make investments that benefit them but might not be the best choice for your retirement savings.” It also says that about 17 billions are unnecessary lost from every from retirement savings account because of our current system that we have; conflicted investment advice causes loss of money from savings account for retirement.
The Fiduciary Rule requires financial advisers to put customers first and they are restricted from accepting any kind of compensation or payments that would create a conflict of interest. The rule basically states that financial advisers must put the clients best interests’ ahead of their own for their retirement savings.
Prior to reading both of these articles, I had no idea what the fiduciary rule was. I barely know anything about financial advisers or about retirement savings, other than you should start doing it early on. “4 Arguments Against the Fiduciary Rule Debunked” by Patrick Tucker explained the fiduciary rule better for me. The author was going against the arguments people had for the rule and explaining why they could be incorrect which helped me understand it better. The first article did have a better definition of the fiduciary rule, but the rest of the reading was a little tough for me to understand.
The fiduciary rule, something I personally have never heard of until today, seems like a no brainer. Apparently, financial advisors are allowed to give advice that is not in the best interest of their clients. Their advice will, in turn, benefit the advisors instead. All of this is 100% legal unless you are, what is called, a fiduciary. This is a term for a group of professionals that are legitimately required to put the clients’ interests and benefits before their own. This “fiduciary rule” seems like it should be an obligation for everyone in the financial advising world however, it sadly is not.
Both the articles, one written by Kathryn Lee and the other by Patrick Tucker, came down to the same conclusion. The fiduciary rule is, in fact, a good one. Tucker and Lee are in favor of fiduciaries and think that financial advisors, who do not work under this rule, are scammers and con-artists. I, myself, happen to agree with them. The article written by Lee was much easier for me to understand. She got right to the point and explained exactly what a fiduciary is and how the rule works. Lee also explained that it is legal for financial advisors to give one-sided advice to clients, which I was not aware of. Reading her article, I was able to pinpoint exactly which side she stood on as well as gain information I was uninformed of. The tone in Tucker’s article was too far over my head. I have very little knowledge in the legal world as well as the financial world, so it was difficult to comprehend much of the vocabulary he chose to use. It was also a challenge to identify which side Tucker took because of the lack of familiarity I had with his writing. I think that it is very important to understand that many clients go to financial advisors and fiduciaries because they are unaware of laws and legal terms. Which is why, regarding the readings, Lee’s article is more consumer friendly. If I was seeking financial help, I would now know to look for a fiduciary or be weary of all financial advice I was receiving.