Compliance February 2, 2016

House Committee Advances Anti-Fiduciary Rule Bills

The Republican-dominated House of Representative’s ongoing effort to halt the Department of Labor’s fiduciary rulemaking is starting to look a lot like its previous attempts to gut the ACA.
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The U.S. House Committee on Education and the Workforce has approved two “bipartisan bills” that would effectively put a halt to the Department of Labor’s (DOL) conflict of interest rulemaking.

The news comes less than a week after the Office of Management and Budget (OMB) confirmed it has formally received and is now reviewing the final fiduciary rule language from the DOL. Perhaps even more important to note than the timing is that conventional political wisdom leaves very little room for a scenario in which the bills could actually make it into law while a Democrat sits in the White House—doubly so because Republicans in Congress made a concerted effort to stop the DOL back in December during a major budget impasse, failing outright. The extraordinary pressures that can emerge in such a budget impasse may well have been Congressional Republicans’ final chance to slow or stop a new fiduciary definition from being enacted before President Obama leaves office.  

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Investment industry practitioners may recall when the bills were first introduced in late 2015, including the Affordable Retirement Advice Protection Act (H.R. 4293), introduced by Rep. Phil Roe (R-Tennessee N), and the Strengthening Access to Valuable Education and Retirement Support Act (H.R. 4294), introduced by Rep. Peter Roskam (R-Illinois). The complementary proposals “would require financial advisers to serve their clients’ best interests and protect access to high-quality, affordable retirement advice,” according to the lawmakers.

Taken together, the bills would require an affirmative vote by Congress before any final rule by the DOL goes into effect. If Congress fails to approve the department’s regulatory proposal, a new fiduciary standard would take effect that “raises the bar for the retirement services industry by requiring advisers to serve in their clients’ best interests; requires advisers to clearly communicate key information to ensure investors are well-informed to make investment choices; and ensures that individuals and families saving for retirement have access to advice and investment options to meet their individual needs and circumstances.”

Data & Research February 2, 2016

Couples Can Clash Over Money Even Before They're Attached

Money issues are sensitive, especially for couples.
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When it comes to relationships, Americans rate financial issues high, according to the COUNTRY Financial Security Index. More than half of Americans surveyed (53%) say finances have caused tension in their romantic relationships—but that doesn’t mean they shy away from discussing money matters. An overwhelming majority (91%) said they believe it is important to discuss finances with a significant other.

Not only did survey respondents say it’s important to discuss personal finances with their partners, most (71%) prefer to start the conversation within the first few months of a relationship or sooner.

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More than three-quarters of respondents (78%) said someone who is single and dating should be concerned with the amount of debt carried by a potential partner, with men (77%) slightly less concerned about this than women (79%). This concern spiked for people over the age of 65 (88%).

Nearly a third of respondents (29%) said they think couples who work with a financial planner are less likely to have disagreements about finances than those who don’t, with women (31%) slightly more likely to think so than men (27%).

Once people are settled in a relationship, some conflicts may smooth out. According to Fidelity’s Couples Retirement Study, more couples agree than disagree about finances: 53% vs. 47%. When they do argue, the four top causes of money spats are spending habits (67%), not saving enough (37%), bills (33%) and debt (29%). Out of those couples who do have money clashes one in four says those spats are never resolved. On a positive note, nearly three in four couples say they communicate “exceptionally” or “very well” on financial matters. 

The low credit score of a potential romantic interest was relatively acceptable to most in COUNTRY Financial’s survey. Overall, respondents said this could be cause for moderate concern, with men (38%) less concerned than women (43%).

In COUNTRY Financial’s findings, debt was the biggest concern, with 78% believing someone who is single and dating should be concerned with the amount of debt their love interest has accumulated. Thirty-eight percent said they consider a large amount of debt to be a relationship deal-breaker.

NEXT: Americans think these are danger signs in a potential mate

Carelessness is an even bigger red flag, COUNTRY Financial found. More than half of Americans (52%) said they would end a relationship if their significant other lacked interest in managing their finances. And the same number (52%) believe income level is a big consideration for singles when choosing a partner.

“Most Americans can forgive their love interest for being in poor financial shape, so long as they care about changing for the better,” says Joe Buhrmann, manager of financial security at COUNTRY Financial. “Data suggests most Americans are less tolerant of a partner who isn’t focused on improving their financial situation.”

Some interesting differences show up among the generations of those surveyed. Millennials tend to be more accepting of a significant other’s debt level. Just 67% of Millennials are concerned with the amount of debt a love interest has accumulated, compared with 78% of the general population. This youngest demographic is especially at odds with the oldest segment of the population: 88% of Americans over the age of 65 believe a significant other’s debt is cause for concern for anyone single and dating.

Some advice from Fidelity’s survey comes from actual, experienced couples who wanted to share their best tips with younger couples:

  • Save as early as possible for retirement (57%);
  • Make all financial decisions together (41%);
  • Make a budget and stick to it (39%);
  • Definitely have an emergency fund (38%); and
  • Don’t hide purchases from each other (26%).

The 2015 Fidelity Investments “Couples Retirement Study” analyzed retirement and financial expectations and preparedness among 1,051 couples (2,102 individuals). Respondents were at least 25 years old, married or in a long-term committed relationship and living with their respective partner, and have a minimum household income of $75,000 or at least $100,000 in investable assets. This online, biennial study was launched in 2007 and is unique in that it tests agreement of both partners in a committed relationship on communication, as well as their knowledge of finances and retirement planning issues.

The Security Index can be downloaded from COUNTRY Financial’s website.

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