Pluralistic: Biden wants to ban ripoff "financial advisors" (08 Nov 2023)


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An engraving of a stooped, elderly beggar, superimposed over the verso of a US$5 bill, cropped to show the White House and the words 'White House' and 'WE TRUST.'

Biden wants to ban ripoff "financial advisors" (permalink)

Once, American workers had "defined benefits pensions," where their employers promised to pay them a certain amount every year from their retirement to their death. Jimmy Carter swapped that out for 401(k)s, "market" pensions where you have to guess which stocks will be valuable or starve in your old age:

https://pluralistic.net/2020/07/25/derechos-humanos/#are-there-no-poorhouses

The initial 401(k) rollout had all kinds of pot-sweeteners that made them seem like a good deal, like heavy employer matching that doubled or even tripled the value of every dollar you put into the market for your retirement. But over the years, as Reaganomics took hold and workers' power ebbed away, all these goodies were clawed back. In the end, the market-based pension makes you the sucker at the poker table, flushing your savings into a rigged casino that is firmly tilted in favor of finance barons and other eminently guillotineable plutocrats.

Neoliberalism is many things, but most of all it is a cult of individualism. The fact that three generations of workers are nows facing down retirement without pensions that will provide them with secure housing and food – let alone money to see the odd movie, buy birthday gifts for their grandkids, or enjoy a meal out now and then – is framed as millions of individual failures, not a systemic one.

In other words, if you are facing food insecurity and homelessness after a lifetime of hard work, it's because you saved wrong. Perhaps you didn't save enough (through a 40-year run of wage stagnation and skyrocketing housing, health and education costs). Or perhaps you saved wrong, making the wrong bets on the stock market. If you can't afford to run your air conditioner during a heat dome, that's on you: you should have been better at stocks.

Apologists for this system will say that you don't have to be good at stocks – you just have to pay an Independent Financial Advisor to pick the stocks for you and you'll be fine. But IFAs don't work for free! What if you can't afford one?

Enter "predatory inclusion" – the practice of offering scammy, overpriced and substandard products to poor people and declaring it to be a good deed, because otherwise, those poor people would have to do without. The crypto bubble relied heavily on this: think of Spike Lee and others shilling for pump-and-dump scams as a way of "building Black wealth":

https://www.nytimes.com/2021/07/07/business/media/cryptocurrency-seeks-the-spotlight-with-spike-lees-help.html

More recently, Intuit and other scammy tax-prep services have argued against the IRS's plan to offer free tax preparation as bad for Black and brown people, because it will deny them the chance to be deceived and ripped off with TurboTax:

https://pluralistic.net/2023/09/27/predatory-inclusion/#equal-opportunity-scammers

Back in 2018, Trump won the predatory inclusion Olympics, when his Department of Labor let the Fifth Circuit abolish the "Fiduciary Rule" for Independent Financial Advisors:

https://www.investopedia.com/updates/dol-fiduciary-rule/

What was the Fiduciary Rule? It said that your IFA had to put your interests ahead of their own. Like, if there were two different funds you could bet on, and one would pay your IFA a big commission, while the other would be a better bet for you, the IFA couldn't put your retirement savings into the fund that offered them a bribe.

When Trump killed the Fiduciary Rule, he proclaimed it a victory for poor people, especially Black and brown people. After all, if IFAs weren't allowed to accept bribes for giving you bad financial advice, then they would have to make up the difference by charging you for good advice. If you couldn't afford that advice, well, you'd have to make bad retirement investments on your own, without the benefit of their sleazy self-dealing.

The Biden Administration wants to change that. Biden's Acting Labor Secretary is Julie Su, and she's very good at her job. Last spring, she forced west coast dockworkers' bosses to cough up the contract they'd stalled on for a year, with 8-10% raises for every worker, owed retroactively:

https://pluralistic.net/2023/06/16/that-boy-aint-right/#dinos-rinos-and-dunnos

Su has proposed a way to reinstate the Fiduciary Rule, as part of the Biden Administration's war on junk fees, estimating that this will increase retirees' net savings by 20%:

https://prospect.org/labor/2023-11-07-julie-su-labor-retirement-savers/

The new rule will force advisors who cheat their clients to pay restitution, and will require them to deliver all their advice in writing so that this cheating can be detected and punished.

The industry is furious, of course. They claim that "The Market (TM)" will solve this: if you get bad retirement savings advice and end up homeless and starving, then you will choose a different advisor in your next life, after you are reincarnated (I guess?).

And of course, they're also claiming that forcing IFAs to stop cheating their clients will deny poor people access to expert (bad) advice. As the Financial Services Institute's Dale Brown says, this will have a "negative impact on Main Street Americans’ access to financial advice":

https://www.fa-mag.com/news/legal-challenge-predicted-for-new-dol-fiduciary-proposal-75257.html

Here's that rule – read it for yourself, then submit a comment expressing your views on it. The government wants to hear from you, and administrative law requires them to act on the comments they receive:

https://www.federalregister.gov/documents/2023/11/03/2023-23782/proposed-amendment-to-prohibited-transaction-exemptions-75-1-77-4-80-83-83-1-and-86-128

Su is part of a wave of progressive, technically skilled regulators in the Biden administration that resulted from a horse-trading exercise called the Unity Task Force, which divvied up access to top appointments among the progressive wing and the finance wing of the Democratic Party. The progressive appointments are nothing short of incredible – the most competent and principled agency leaders America has seen in half a century:

https://pluralistic.net/2023/10/23/getting-stuff-done/#praxis

But then there's the finance wing's appointments, like Judge Jacqueline Scott Corley, who ruled against Lina Khan's attempt to block the rotten Microsoft/Activision merger (don't worry, Khan's appealing):

https://pluralistic.net/2023/07/14/making-good-trouble/#the-peoples-champion

Perhaps the worst, though, is Biden's Secretary of Commerce Gina Raimondo, a private equity ghoul who did a stint for the notorious wreckers Bain Capital before founding her own firm. Raimondo has stuffed her department full of Goldman Sachs alums, and has sidelined labor and civil society groups as she sets out to administer everything from the CHIPS Act to regulating ChatGPT.

As Henry Burke writes for the Revolving Door Project and The American Prospect, Raimondo's history as a corporate raider, her deference to the finance sector, and her and her husband's conflicts of interest from their massive stakes in companies she's regulating all serve to undermine Biden's agenda:

https://prospect.org/economy/2023-11-08-commerce-secretary-gina-raimondo-undercutting-bidenomics/

When the administration inevitably complains that its popular economic programs aren’t breaking through the media coverage, they’ll have no one to blame but themselves.

The Unity Task Force gave us generationally important policymakers, but ultimately, it's a classic "pizzaburger." If half your family wants pizza, and the other half wants burgers, and you serve them something halfway in between that makes none of them happy, you haven't made a wise compromise – you've just made an inedible mess:

https://pluralistic.net/2023/06/17/pizzaburgers/


Will Staehle's cover for the Tor Books edition of 'The Lost Cause,' featuring a glittering snake motif from the Gadsen Flag.

Announcing The Lost Cause Tour (permalink)

There's just one week until my next novel, The Lost Cause, goes on sale, and I'm hitting the road with it! I hope you can make it out – tell your friends!

Los Angeles: I'll be at the Studio City branch of the LA Public Library on Monday, November 13 at 1830hPT; there'll be a reading, a talk, a surprise guest (!!) and a signing, with books on sale. Tell your friends! Come on down!

https://www.lapl.org/whats-on/events/author-talk-cory-doctorow

Stratford, Ontario: I'm onstage on November 16 at 19hET with Vass Bednar at the University of Waterloo Stratford School of Interaction Design and Business. I'll also be doing a talk for middle-schoolers at the Stratford Public Library on November 16 from 1330hET-1430hET.

https://www.eventbrite.ca/e/cbc-ideas-visionaries-in-conversation-tickets-729692809837

https://www.provocation.ca/upcoming-2023-events-stratford

Concord, NH: I'll be at Gibson's Bookstore on Saturday, November 18th at 13hET.

https://www.gibsonsbookstore.com/event/doctorow-lost-cause

Simsbury, CT: I'm at the Simsbury Public Library on November 20 at 19h.

https://simsbury.librarycalendar.com/event/author-visit-cory-doctorow-29257

Toronto, ON: I'm at the Metro Reference Library on November 22, at 19hET, hosted by Vass Bednar.

https://web.archive.org/web/20230907160105/https://www.torontopubliclibrary.ca/detail.jsp?Entt=RDMEVT495758&R=EVT495758

Toronto, ON: I'm hosting Frances Haugen, the Facebook whistleblower, on November 27 at 19hET, at the Metro Reference Library.

https://web.archive.org/web/20230907160103/https://www.torontopubliclibrary.ca/detail.jsp?Entt=RDMEVT496408&R=EVT496408

New York City: I'm at the Strand Bookstore on November 29 at 19hET.

https://www.eventbrite.com/e/cory-doctorow-the-lost-cause-tickets-734958008187

Chapel Hill, NC: I'm at Flyleaf Books on December 5, live with Sarah Taber, at 18hET.

https://www.flyleafbooks.com/doctorow-2023

If you don't see your city on this list, don't panic! I've got another tour coming in a couple of months, when The Bezzle, sequel to Red Team Blues, comes out in February:

https://us.macmillan.com/books/9781250865878/thebezzle

Hey look at this (permalink)


A Wayback Machine banner.

This day in history (permalink)

#10yrsago Feds subject drug suspect to vaginal/anal probe, X-ray, CT Scan, without a warrant — find nothing https://www.thedailybeast.com/dog-orders-cavity-search-lawsuits-ensue

#10yrsago Business-logic of cooperating with the NSA has changed https://www.theatlantic.com/technology/archive/2013/11/a-fraying-of-the-public-private-surveillance-partnership/281289/

#10yrsago How much value did your account generate for Twitter? https://newsfeed.time.com/2013/11/07/interactive-this-is-how-much-money-twitter-owes-you/

#10yrsago Rob Ford’s exaggerated and imaginary savings to the taxpayers of Toronto https://www.thestar.com/news/gta/city-hall/deconstructing-mayor-rob-fords-fiscal-record/article_8c6e3bf3-bea5-54d8-8e2c-d28b5bfcf631.html

#5yrsago Europe’s collision course with copyright censorship: where we stand today https://doctorow.medium.com/europes-copyright-rules-will-stifle-free-expression-8633e91f5284

#5yrsago Congresswoman Alexandria Ocasio-Cortez can’t afford to rent a DC apartment https://www.cnbc.com/2018/11/08/alexandria-ocasio-cortez-cant-afford-to-rent-an-apartment-in-dc.html

#5yrsago Bruce Sterling on architecture, design, science fiction, futurism and involuntary parks https://www.youtube.com/watch?v=Z0__x5SG8WY

#1yrago Delegating trust is really, really, really hard (infosec edition) https://pluralistic.net/2022/11/09/infosec-blackpill/#on-trusting-trust


Colophon (permalink)

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  • Picks and Shovels: a sequel to "Red Team Blues," about the heroic era of the PC, Tor Books, February 2025

  • Unauthorized Bread: a graphic novel adapted from my novella about refugees, toasters and DRM, FirstSecond, 2025

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