 All right. Good morning and welcome to the panel on investor protection. My name is Andrew Wu. I'm an assistant professor of technology and operations and assistant professor of finance at Ross School of Business At Ross and also in collaboration with multiple schools across campus We have launched multiple fintech initiatives aimed at putting us at the forefront of the innovation So these range from undergraduate to graduate courses and programs on different areas of fintech Action-based learning programs that place students directly in fintech startups and incumbents as well as collaborative research on new technologies and business applications With leading industry practitioners So you know on the consumer side Technology has really brought a dazzling and complexity of new products and technologies on all fronts of a consumer's financial lives from payment to credit and lending to investment and to financial planning and advisory for instance Robo advisors you know the practice of algorithmically generating portfolio allocation advice and that based on the client's financial Situation and risk tolerance and then automatically executing these advice for a fraction of the fees Charged by human advisors that has become a hundred billion dollar industry last year And it's poised to become a trillion dollar industry in the next five years You know after the crypto bubble has burst now there has been a new generation of financial products such as stable crypto currencies and tokenized equity offerings that are poised to fully digitize a consumer's financial life But with all that excitement in the last couple of years people seem to have started to forget the basic core principles of consumer and investor protection and Because all these products come with a slew of unforeseen risks that potentially has huge implications For both the investor themselves and also the market. So today we have a distinguished panel of experts on Consumer and investor protection and we're going to explore the current regulatory landscape as well as recent developments in consumer protection And how new technological innovations Affects the complex relationship between the consumers the investors the regulators and also the markets So for this panel instead of individual presentations, we're going to go right into a free-flow discussion I'm going to start by raising some questions to the panel We'll go from there and then we're going to open up to the audience for Q&A So I guess you know my first questions that for many of you on the panel we have been seeing you know for years that the standard of conduct for finance professional for investment professionals and The most important step in for policymakers could take to improve protections for the average retail consumers and investors Why is this so important? So I'll jump in I'm Barbara Roper. I'm director of investor protection for the Consumer Federation of America And I have been working on this issue in one form or another since I joined CFA in 1986 I wrote my first letter on this topic to the SEC in 1999 and I'm sure we're going to get it solved any day now If you think about the investment marketplace that's out there There is as you say an enormous. I mean one of the things we do really well as innovate There's a product for every need you might have right sometimes hundreds or thousands of products for you to choose from to to provide capital growth or Income or whatever it is your investment goal is and what we know about most investors is they do not have the financial sophistication to look at those those available investments and determine which one are the best for them and During that period since I when I started at CFA there was actually quite a small percentage of the population that invests It's now the way we fund our retirement. It's the way we fund our children's college education The investors who are or are out in this marketplace are financially Unsophisticated need to make every dollar work and extremely vulnerable if things go wrong So what they do is they turn to financial professionals to help them Make these choices and here again There's good news if you have a hundred dollars to invest or a few million if you want One-time advice about what to do on a rollover. You want comprehensive financial planning and portfolio management If you want to pay commissions or hourly fees or asset fees or a retainer fee There is a business model out there with you in mind but most of the people out there who are competing for your business Call themselves financial advisors market their services as long-term trusted advice Dedicated to acting in your best interests. They are either brokers or insurance agents regulated exclusively as Sales people with no Obligation to recommend to you the investments that would actually be the best option for you and Even in the area where technically we have a fiduciary duty for investment advisors who are out there who are supposed to Apparently acting your best interest at all times cannot Cannot disclose or negotiated that about an obligation away as Enforced by the SEC All they have to do is to disclose to you the ways in which they are not going to act in your best interest And they have satisfied their fiduciary obligations So we have a population that is vulnerable that is using the markets for vitally important purposes Relying on financial professionals who aren't being held to a standard of conduct that is even remotely adequate to provide adequate protection Can I jump in? I'm Steve Hall. I'm the legal director and security specialist for better markets we're an advocacy group that's been in existence since 2010 and Really for much of our early years of advocacy, we're focused on making sure the financial system was stable and Could could avoid another devastating financial crisis like the 2008 nightmare But in fact this issue to echo a lot of what Barb was saying Really in our minds took on such an immense importance a kind of gravitational pull That we got heavily engaged in the DOL's fiduciary duty rule and we're heavily engaged now on the SEC's reg bi and I think to recapitulate it. It's really about protecting investors in the most fundamental sense across a broad range of product services and financial professionals But we also see Importance in this endeavor because there's a there's a connection to financial stability in other words when large numbers of investors are exploited that tends to really generate the raw material that can be part and parcel of a financial crisis in 2008 what was it it was exploitative predatory behavior among mortgage brokers and mortgage lenders and It's important to see that that the value of investor protection Is is critical in and of itself But it also has a kind of nexus to the rest of the financial world and the financial market place And the other footnote I wanted to add and in a way It's it's sort of discouraging because we have enough of a challenge facing us In terms of trying to get the SEC to do a much better job with what is currently a really a terrible rule We think it's also important still not to lose sight of the fact that in the end Even a very strong standard has got to be Inforcible in a meaningful way so so we mustn't lose sight of the fact that the challenges associated with things like mandatory arbitration Loss of access to the court system. We have to keep those in mind and fight on that front as well So let me jump in with just a a little bit of data to try to to bolster what? You two were just saying so You know consumers I think do rightfully think when someone says they're giving them advice That it's advice not a sales pitch, right? So sometimes people would say to me like well, why do we need to regulate advisors like we don't you know You know what you're getting when you go to a used car dealer and I'm like well imagine if used car dealers Marketed themselves as transportation advisors come to me to figure out the best bus routes or if you can only manage by buying a car Right so we sort of that's a laughable idea But essentially there are financial advisors that that is the what they are what they're basically doing And so what does that mean? Well, that's why I didn't introduce myself I'm Betsy Stevenson, and I was a member of the Council of Economic Advisors and Chief Economist at the Department of Labor in both capacities getting involved in this rule and When I was at CEA Jane Doco, and I put together a report to try to quantify what was going on in the industry And I think the thing that really struck me is that really a lower bound of it Estimate is that retirees end up with five to ten percent less savings because of conflicted advice And I say this is a lower bound estimate because you know empirical scholars. We want to show causal effects So we're not trying to figure out exact the exact magnitude of the effect We're trying to show all the places in which we can say for sure Conflicted advice causes this loss and so we get these estimates of five to ten percent What does that mean for a typical person who's say investing over a 30-year? Period and then going to draw down their retirement assets They're going to run out of assets about five years earlier So you mentioned what does this mean for the overall financial stability? What does this mean for the overall? Financial stability of the federal government who's going to pick up the slack when people run out of retirement assets Where is the pressure going to be when the baby boomers run out of money? So they're not just taking money from the baby boomers They're taking money from all of us because I think there's going to be enormous pressure For the federal government to step in and help these folks out when they run out of money So we all have a vested interest in solving this problem Hi, my name is Jane Durbin. I just wanted to I guess Introduce myself and then I'll also offer You know as a somewhat different perspective I'm an assistant vice president at the Federal Reserve Bank of Chicago And so before I even like go any further I just need to say that my participation in this panel is just on behalf of myself as a concerned citizen And not on behalf of anyone else I'm glad Betsy that you remember those estimates because they've kind of been buried sort of deep in my mind I've kind of just You know kind of just have forgotten or have sort of buried a lot of the work that we did because where we are now with You know the regulation and sort of thinking about investor protections is very different from where we were You know five years ago and sort of what's happened to You know sort of the fate of Protecting consumers and savers from these conflicts has just taken a very sort of depressing toll So I'm really glad you remember that I guess You know the other perspective that I bring is you know as somebody who's worked on household financial decision-making and sort of studied how people Make decisions on behalf of themselves And and it's not just vulnerable populations that get swindled into you know bad investments or You know complex annuities, you know where they sneeze and then they lose all their money I mean these problems extend to a broad, you know swath of savers and you know research shows that you know There's a lot of complexity in financial markets Andrew alluded to this earlier when he was sort of describing you know that the technological innovations that have changed the landscape for financial advice and You know part of the reason why You know these estimates of these impacts on savers are so large is that these mistakes that people can make and And and sort of the the set of vulnerable people is is really large So for those in the audience who hasn't kept up with regulatory updates There has been a significant change in the regulatory landscape in the investment advisory market So basically in 2015 right so the Department of Labor proposed a really sweeping rule on fiduciary duty Which basically said that as long as you as a financial advisor as long as you have anything to do with Financial advisory or retirement planning these type of activities You are automatically considered a fiduciary and therefore held With fiduciary duty So you're held with a standard that you need to put your client's interests strictly above yours And it doesn't matter if you're a broker paid on a commission or an insurance agent or a fee based financial advisor and So this would obviously have a tremendous impact on the commission based Brokers and visors who are mostly has been regulated by FINRA and held at a lower standard of Suitability right but this would also impact the compliance structure of the entire financial advisory industry as a whole You know as you can expect the financial industry really fought tooth and nail And against this and after really protracted Series of legal battles and the rule was essentially vacated by the Fifth Circuit Court last year and Was expected to be replaced by the SEC's Regulation was called the regulation best interest which is essentially a weaker version of this And that is expected to be released by the fall and a several of our panelists are actually Instrumental in creating this fiduciary role So I'd like to hear some of your insights, you know on the creation of this role and you know It's rationale and it's relation for the with with consumer protection and in the eight especially in the current age So let me start and then I'll turn it to to you guys, but first of all, I'm just going to disagree with you that it was a sweeping rule So I've watched what was happening in a bunch of other countries in the UK and Australia and the Netherlands Their sweeping would be banning commissions that and What this was trying to do was oh Say look you you can take your commissions, but you're still supposed to have your clients interests first So you need to meet a best interest standard I you know to to really understand where this was coming from you have to Understand how the retirement landscape started changing So it used to be most people got a defined benefit plan Which meant that their employer offered them some kind of retirement plan and that retirement plan was essentially a pension That was going to pay them some fixed amount in retirement They didn't have to worry about the returns that was their employer's job to worry about the returns because what they were told was the benefit they were getting in the starting in the 1970s we started having these defined contribution plans 401k's and then they're still tied to people's employers and so the That has been the big shift is to 401k's that get rolled over into IRAs So when you ask, you know, where is this you know conflicted advice coming from my favorite study? Was a guy who had his money a secret shopper who had his money and the federal government's thrift savings plan Which is about the lowest fee plan you could possibly have The guy calls Nine advisors and says should I roll it into an IRA or just leave it where it is eight of the nine said you Definitely need to roll it So that that's the sort of that is the the changing landscape I think DOL and if you want to know why it's opposed so much by industry it comes back to that five to ten percent They're taken out of retirement savers. We estimated that's 17 billion dollars a year People are gonna fight like hell over 17 billion dollars a year financial industry doesn't want to give that back to retirees So it's gonna be a tough regulatory not to crack But it DOL didn't go sweeping what they did was I thought very surgically went in and said Here's what we need to do to give people a minimum set of protections that when they are seeking advice They know at least their best interests are going to be the front of people's mind Sorry, just to jump in really quickly before Barb, I know you have a lot of interesting things to say on the topic I just also want to push back on the idea that it was sweeping it's not sweeping because it was just you know Targeted at retirement products You know lots of people get financial advice for you know lots of things that are not related to to retirement and the world didn't touch that So I just like to say I think what the industry found so threatening about the DOL rule was not the words best interests But the DOL meant the words best You know when they I mean seriously I it's it sounds like a joke, but it's actually true Finra describes their suitability standard as requiring brokers to make recommendations that are consistent with the best interests of their customers as Improventing them from placing their own interests ahead of the customers That's how the SEC describes the investment advisor act fiduciary duty. That's how DOL described its fiduciary standard And so the words are virtually indistinguishable But when DOL said best interest they meant you have to look at what's you have available there And you have to decide which one or ones you think are the best match for the investor And I remember when I read it was I think comment from FINRA, which is not the worst player in this process But you know saying they seem to think best interest means best interest Yeah And then the second piece of what DOL did that was so important was they said Yes, you can have your you can get your commissions You know you can get transaction-based payments But this business of sales quotas and sales contests and getting paid ten times as much to sell this Product is that product you've got to put some serious policies and procedures in place to reign in those conflicts and You started to see before the rules demise real changes I mean we were at the brink of a revolution in the way services were going to be offered to the investing public We had something called clean shares which allowed for a transaction-based purchase of mutual funds That will where the the fee was set between the broker and the advisor You know in the customer instead of by the mutual fund deciding how much the broker was going to get paid to sell Me a mutual fund so you really started to see some innovative changes taking place to To wring out some of these excess side conflicts in the broker dealer business model Disappeared in a flash when the when the rule was overturned and the same groups that went into court to sue To stop the DOL rule are now champion at the bit to push the SEC rule through Which uses as I say virtually identical words best interest can't place the broker's interests ahead of the Investor's interest, but doesn't mean them So best interest certainly doesn't mean you have to recommend the best of the available products The prohibition on placing the broker's interests ahead of the customers doesn't even make it into the safe harbor You know it's the chief thing the SEC used to sell their rule and it doesn't even make it into the safe harbor And everything else is so vague and undefined that we It has no concrete meaning and we've seen how they enforce similar context. This is concepts in the advisors acts Context and there's no they are there. So that's the concern. That's why the the rules have flipped on the SEC rule Yeah, and and there's an interesting legal perspective perspective that that Comes to bear here both as to the DOL's rule and as the SEC's rule and with respect to the DOL You know, they were dealing against the backdrop of ERISA, of course, which is famously a strong Statute which recognizes the fundamental importance of conferring special protections on retirement assets And makes it very clear that there's abundant authority to Establish a broad fiduciary standard The the thing that I think DOL was facing and one reason why it perhaps wasn't as Sweeping as it could have been as good as it was is number one a year after ERISA was passed in 74 75 comes along there's already industry influence that comes to bear and they put in place a rule Which is which is terrible. It has a complicated array of preconditions before the fiduciary status actually kicks in It says in effect the advice has to be rendered on a regular basis. It has to be the primary basis So really for 40 years What happened was industries practices and expectations became entrenched The DOL had to fight against that the second thing that they were up against and I think they really deserve credit In particular in the way they handled this they wanted to confer greater protections for IRA owners and Because of the way ERISA was structured in title to which dealt with with IRA accounts They didn't have the same plenary authority to act. They did they took some very creative steps I think by all accounts to creative according to industry and a three-judge panel in the fifth circuit To really try to to fix that gap and and it was an admirable effort I think we can talk later about the lawsuits because there's a lot of interesting observations there on the sec front quickly It's it's it's disappointing because in Dodd-Frank Congress gave the sec very clear authority to establish a broad strong and uniform fiduciary standard for investment advisors and broker-dealer reps and One of the reasons why I think From our our perspective. It's so disappointing. Is it they latched on to the weakest statutory? Authority on which to predicate their rule Okay, so following up on that about the sec rule So, you know just from both the legal perspective and also from the economic perspective Do you think the sec rule should be you know could be improved, you know from you know on these perspective and also, you know Say if you were like the you know chief economist at the sec What would you do, you know to make this rule a little bit better right in terms of In terms of investor protection generally so so yeah, I mean so To Steve's point, I mean we fundamentally disagree with the approach the sec took the legal authority that they used But what we've Instead of fighting that fight although I think that makes them vulnerable in court instead of fighting that fight at this stage of the process We've tried to engage constructively to say you say you want to raise the standard of conduct over the existing suitability standard You say you want to Prevent brokers from placing their interests ahead of their customers interests Here are the changes you would need to be make in your rule and Importantly your interpretation of the rule to achieve that and so the first one is to you don't even necessarily have to change the language around The best interest standard, but the interpretation of that standard Needs to make clear that it When they say you have to act in the best interest of the customers It means you have to recommend the investments you Reasonably believe after a prudent process represent the best of the reasonably available investments the best match for your investor It should be you know if a thousand mutual funds satisfy suitability Best interest should be Satisfied by I don't know 10 or 20. I mean there it's never going to be just one perfect investment But it ought to be a narrowing down of the the investments The second is if you want to prevent brokers from placing their interests ahead of the customers Let's get that into the operational provisions of the rule that fully satisfy compliance And the way to do that is to take what's already the best provision in the rule one of the things it does is it says Brokers would have to Have policies and procedures in place that are made reasonably designed to mitigate financial conflicts of interest Reasonably designed to do what it doesn't say Reasonably designed to prevent the broker from placing its interest in the interest of the associated person ahead of the customers would be a really nice way to incorporate that concept into the operational provisions of the rule and to put some real meat into that mitigation requirement and then you might see Some of these things like the sales quotas for the sale of proprietary products or the contests To encourage the sale of a certain category of products or revenue sharing payments You know getting paid more to push the products that pay the firm more, you know, whatever you might see some of those Conflicts actually reigned in as it is industry clearly thinks they're just going to be able to paper over those kind of Conflicts without having to make any meaningful change and then the third one Which is necessary actually to ensure that this rule doesn't weaken existing protections for investors Is the brokers who are in an ongoing duty of trust and confidence with their customers? ongoing relationship of trust and confidence need to have an ongoing duty to those customers just as courts have found that they have under the You know state common law fiduciary standards So by saying that brokers automatically absolutely in every circumstance have no ongoing duty at the end of a Transaction this rule actually weakens one of the fundamental protections that investors now get Yeah You know, I agree completely with Barb's analysis though. That's really kind of the The trifecta of what needs to be fixed here I think hand-in-hand with that is that this this proposed rule relies much too much on Disclosure this is this audience is very sophisticated I think everybody here understands the shortcomings of a disclosure regime when it comes to protecting investors in short and across the board It's especially true and this goes back to the theme we talked about at the beginning You know financial advice is technical. It's complicated It's it's almost to expect disclosure to serve the best interests of an investor who needs in advice is like asking a patient right to to Basically to educate themselves and then make the decisions about what it is that they should do to look after their health Yeah, I mean the asymmetry there is just Astonishing people don't necessarily think of it that way in finance, but it's true And and then on a you know, there's a whole cluster of issues around disclosure But again, it's it's mainly excessive reliance on disclosure and it so happens Disclosure that hasn't been adequately tested The testing that has been done by independent organizations clearly indicates that the disclosure regime that goes along with reg bi Is woefully inadequate the SEC didn't do its homework before it actually put out the proposal And it needs an enormous amount of work there. I could just pick up on the point about disclosure I mean I completely agree with your characterization of sort of the problems with disclosure And I mean as an economist the idea that you would try to address these foundational problems with incentives by using fine print is so bizarre to me and And and in part it's because you know, there's all this research that shows that you know Disclosures often have unintended consequences if you know brokers disclosures that they're conflicted You know that you know sometimes leads The people receiving the advice to trust them more not less I mean the there have been sort of these independent studies of disclosures on sort of how you know on on sort of like a psychological level people You know read how much time do they spend reading these documents? What information do you know? Do they do they retain versus not retain and and none of that is like terribly optimistic that it's going to you know change You know Investors behavior and and that's really just what's so problematic about the disclosure regime is that they're aiming to solve the problem by Changing you know the information that investors get in changing investors behavior when we have a lot of evidence You know and Betsy cited it earlier saying that the problems are not you know You know among people who are trying to save and you know work toward a secure retirement. It's it's on the other side so Let me just Add a little bit to what Jane was saying about disclosure because we're although we're all in like vehement agreement here But I think I think that my natural inclination as an economist had always been to think like well disclosure at least it can't hurt It turns out that's wrong And and when we were looking at the DOL rule, I Mean Yeah, we spent a lot of time thinking about disclosure What would be a disclosure regime that would work? And I became convinced that disclosure is just never gonna work here and bad disclosure could really really hurt So how does bad disclosure hurt? Well, it turns out it studies show That people have a little bit of a moral compass and that moral compass prevents them from cheating people completely That's a good thing But when we give them disclosure their moral compass gets worse because they think I disclosed So now their moral compass that shouting don't cheat the old guy isn't shouting as loud anymore because hey You told the old guy what to expect so the problem is the the broker dealers themselves are less Less constrained by their own moral compass once we have disclosure and then on the flip side The consumers who are getting it are thinking as Jane mentioned. Oh, well, at least he told me So maybe I can trust him more and I just wanted to circle back to that that Retirement for a lot of people is really stressful, right? I'm pretty sophisticated and I still don't like to sit down and think about my retirement planning and What people want is someone that they can trust That will give them advice that will just tell them what to do so they can stop thinking about this hard problem and That trust is a really important part of the relationship and you can't have it if the person Doesn't have your best interests at heart You should not trust and I think the only disclosure that I could get behind Would be at the very beginning the person looking you in the eye and saying do not trust me Nothing I say is true Just to follow up by the point of thinking like an economist, you know in a both best in jing You spend a lot of time and also energy right so economically studying the understand the nature also the extent of just the advisory conflict of interest and that culminated in a you know, the White House's Council of economic advisors report that basically says that well the matter is really big it costs the investors up to $17 billion a year or 1 percentage points per year So, you know just SEC also recently put out a series of analysis economic analysis In support of the rec bi so I'm wondering if I get a chance to review that and you know What are your thoughts on this in particular? You know given that recently there's 11 economist and on a bipartisan basis Coming out and wrote a letter that says that pointed out a series of flaws with that economic analysis So I'm wondering what your thoughts are on that and could it be improved? All economics economic analysis can be improved and so that's just always a given I mean, I I spent some time, you know reading through their analysis and I would I would sort of hesitate to call it an analysis Because because the basic structure of it was let's deny the problem exists And then conclude that the rule has minimal impacts because there is no problem And I'm sorry like if this is to reductionist and I'm like, you know glossing over some important nuances and complexities And so you should hold me accountable to it But that was sort of like my take away from it and and then you know, I started to think well Why would a you know a federal agency that is you know sort of bound by you know guidelines and regulations to put Forth cost benefit analysis when it's promulgating, you know new regulations You know that considers, you know the societal, you know benefits and harms of regulations Like why would they do something like this and and the only sort of explanation that I could sort of think of are sort of these like, you know political economy challenges You know within the SEC whereby factual analysis couldn't you know inform their policy deliberations and and then I just got really depressed and so But but that was that was my takeaway of their economic analysis So I think it took like 50 pages of CFA's comment letter to explain all of the things that were wrong with the economic analysis So I'll spare you that but This letter that Andrew referred to is really extraordinary the senior economist from the SEC dating back to 1982 Submitted a letter to the agency saying You haven't defined the regulatory problem That you're trying to solve and here are some issues you haven't considered like the impact of conflicts of interest on advice for example You haven't considered the available economic evidence I mean Jane's right. I mean to To call this an economic analysis applies that there is analysis and there's not So I think when I look for the explanation of why it's so lacking. I think it's because The SEC is very afraid of being sued by SIFMA and not the trade association for Broker dealer firms and not at all afraid of being sued by CFA and So if they were writing a rule that they thought the industry would challenge They would have had to be far more rigorous But I think they are complacent in Thinking that as long as the brokers are happy with the rule and believe me they're happy They don't have any legal risk I don't think they've adequately weighed the degree to which the advisors are unhappy with the rule So I think there's still some exposure there But it is sort of a reality of the system is that for a group like ours to try to get standing to sue to challenge a Rule is extraordinarily difficult for the industry who challenge a rule they don't like is Costly but much easier and that's what went into that Yeah, and once again to bring up a little bit of the more legal perspective even to the issue of economic analysis I love the way Jane put it. It really is spot-on And if you if you look at her points and the other Points about the shortcomings they They don't pass muster under any of the legal tests that govern what an agency has to do to justify its rules on economic grounds and in the SEC's case I mean one of the bedrock rock principles of administrative law the State Farm case is an agency has to consider All of the relevant factors. I mean we're stepping even beyond economic analysis. What's the relevant factor? There's a problem here, and it's huge and they just you know glossed over that So right there you've got a legal issue that's sort of connected to the so-called economic analysis Even if you drill down in a more technical level the securities laws are very specific They don't require the SEC to conduct a detailed Cost-benefit analysis to quantify things to match them up and balance them The statutes do require the SEC to do what we call the ECCF analysis to consider the impact of a rule on Efficiency competition Capital formation and even under that clear-cut standard The agency did a dismal job and the one that stands out I think we've all talked about this at some point or another is their competition analysis What what's going on with this rule? They are desperately protecting and preserving two different Standards for two groups of the advisory industry the broker-dealers and the investment advisors It's not a Coherent competitive or level playing field. It just flies in the face of what makes competitive sense Finally, you know a little known fact is that in the very section that details the SEC's Obligation to do this kind of consideration of economic factors. It says crystal clear First and above all else in essence you have to consider the public interest and so no matter what the SEC might try to do even if it were to sort of Dot more eyes and try to make this thing Pass muster under an economic test what they continue to gloss over is the mountain of evidence that there's immense Harm being done and until they get to that point. They're never going to be able to have the foundation for an So I think the only thing I want to add is just take it back to what did you know what what did we do at CA and That was a report that wasn't designed to be a cost-benefit analysis of a rule at all It was designed to really lay out the problem as the research as the research community Independent researchers had started to identify there's just a number of papers out there that have found problems with conflicts And what we were doing was pulling them all together to be able to say look there is a coherent problem here Where does it come from? I know we've talked about conflicts, but we haven't really put you know nailed down What do we mean? We see excessive churning research documents that because These broker dealers get paid for churning that people are excessively churned What is excessive churning mean it means excessive fees for them And that's one of the things that eats down Eats down people's retirement savings the other thing as we see people steered into overly complex products because it's harder for them to see the costs that the Advisor is getting when it's a complex product right you can look easily at you know a passive Indexed mutual fund and see what the fees are it's much more It's much harder to tease out what you're paying when it's a complex product So you see people steered into inappropriate products for them Because of the fact that it's going to generate fees for the advisor and So the the cost to the person is not just the fees, but the fact that the product is inappropriate So it's going through systematically and trying and saying look the research shows This is what happens when people get access to conflicted advice And there's no one study that said what happens when we take conflicted advice away And we saw people's retirement accounts going up. So we we brought a lot of evidence to the table That's not the evidence that sec is interested in right now And they were called out on this by the 11 They I think they were it was that the chief economist They weren't just cheese senior economist that the as former senior I thought they were they were the chief economist and they were called out on the fact that they didn't bring any of this evidence to bear And just to be clear the the DOL took the excellent analysis that you all did at CEA and further developed it, you know, it's I said recently that comparing the sec's Economic analysis to the DOL's economic analysis is like comparing a Dick and Jane reader to a PhD dissertation I mean, they're just they're just night and day You know speaking about the CEA report so even you know after you were you released the report There's almost like immediate industry pushback on that on that on that analysis, right? You know, what was your reaction? Did you expect it? You know, what what is your is there anything that you learned from this experience with the old industry kind of? follow up with that Jane you want to go first I mean, I Guess I think, you know Just you know from the advice that you know, you know I got from you know Betsy who had served in government before and sort of had worked on this You know rule over over the years and others I think I think we expect us and pushback I think I didn't really appreciate the scale of it and I learned I don't know after I left government that the financial industry Spent a healthy seven figure sum Funding research that would undermine the report and that made me feel that I had done something right You forgot the finger quotes around research Yeah, that's a great way to put it I mean there I think it's simple They're making a lot of money off of people They want to keep making a lot of money off of people and I you know, they are of course when you know you Reveal that the emperor has new you know, no clothes There's gonna be some pushback. That's exactly what we saw and the you know I thought the scale of the pushback meant that we were not wrong but In assessing the scale of the problem and as I said, I think we are at a lower bound on the scale of the problem And they know that and that is why when we had very good evidence to come up with a 17 billion dollar number They needed to fight back and they needed to try to discredit us and I don't think that they were successful in that in Anyway So one thing I think that was interesting about that is the reason we had such a focus on the economic analysis in that process at All was because one of the industry's initial Tactics to defeat the original do well proposal is to say you hadn't they hadn't adequately Assessed the economic impact. They needed to do a more detailed economic analysis and that was one of their Initial arguments that got the initial proposal withdrawn. I think there's an interesting implication in that for industry and while it Which is that by definition if that's the way they want to play this game? Every issue will be fought based on how Harmful their conduct is for their customers. That will be the public debate. It will be painful for them and ugly and The the DLL analysis held up in court In and Steve can talk about that in court after court after court until an extreme panel in one court overturned it But it you know one of the reasons I think we see such as shoddy analysis out of the SEC is because if they did a decent Analysis they would have to propose a decent rule Yeah all good points I the My own view is that that that the industry was never successful in really laying a glove on on Even that modest 17 billion right? I mean that and and as a result of that what they had to do was was Resort to a couple of other just deeply misleading mythologies In order to really fight back against the DOLs rule and variants of those same arguments are being deployed against the SEC but they they're they're much more comfortable, so There's a context is different, but in the case of the DOL With I think one of the arguments they deployed to some effect at least in some audiences was this crazy notion That if this rule is strong if it's a broad fiduciary standard You're going to restrict the ability of everyday investors to get affordable Investment advice the the sort of limiting access and it's this just extraordinarily kind of perverse way of looking at regulation You see it in the payday lending context where payday lenders are the agency itself now is saying look If we have strong underwriting standards in place Then payday lenders will go out of business and people will lose access to credit I mean, it's a little bit like saying to a malnourished starving person Don't you want some of this rotten poisonous food? And it doesn't make sense when you really take a close look at it The other thing that they did in the DOL context was was law and this again still you still hear echoes of it Is that the SEC was the agency that had the expertise the jurisdictional power to deal with this issue and There's you know, there's half a dozen reasons why that is completely wrong Congress in ERISA Made it crystal clear that the DOL had responsibility for retirement accounts far more than just securities Nothing that the Dodd-Frank had in it negated that in fact it reinforced the notion By saying to the SEC we want to give you greater authority to protect investors with a fiduciary duty And at the same time they said nothing about scaling back the authority of the DOL under ERISA So neither of those arguments are ever made sense, but in this crazy world they got traction Yeah, I just wanted to add that you know, that's the small saver argument Just always drove me crazy because it was a it's essentially the argument that if people knew how much they were actually paying us For this advice they would stop paying us for this advice, right? And so Okay, maybe That sounds good that sounds like they should stop paying if you think they don't want to and when And it once we had done our analysis I think it made it easier for us to talk about that that it was that the problem with for small savers is that they were charging Them too much and people were only willing to pay it because the fees were just so hidden Right, and I just like to throw in one side note The industry groups that went into court to challenge the rule the basis for their argument was We are not advisors We are mere sales people engaged in arms length commercial sales transactions No different than a car dealer and the court bought it When they're not in court trying to defeat effective regulation, they're back to being trusted advisors And so I mean their argument sounds a little less compelling if you say well, you know if you if you pass this rule You're gonna lose access to biased sales recommendations from a salesperson who has Incentives to recommend the products that are most profitable for the firm instead of the ones that are best for you Oh, no But beyond that and to get into an issue. I think Andrew would like us to talk about Technology has fundamentally changed this equation not just through the advent of robo advisors But by allowing for the automation of a lot of the aspects of advice that were once very labor-intensive And so we have a variety of options available in the marketplace now where advice is available Under a fiduciary standard at a very low cost to even very low Accounts and so in the unlikely event that the broker dealers would they always, you know if you you know I'll take my ball and go home You know in the unlikely event that they would actually abandon this market entirely if you made them act in their customer's best interest There is a viable alternative out there Available to fill that space that would leave investors much better off than they are today So yes, there's to follow up on that point when the fiduciary rule was first introduced was first proposed It turns out that not very surprisingly the robo advisors were actually the biggest proponents within the financial service industry Right so their argument is that well if we raise the standards the cost will you know will go up? Hey, you know, we're cheap So I'm just wondering, you know, what what does the panel think this is robo advisors the response to the cost argument You know raised by the broker dealers and you know, what general role does technology have in playing this to solve this problem? so I think that the Challenge is that people like to think that they're unique and they want to have that trusted personal Relationship with someone when it comes to retirement But the the truth is the typical person has typical retirement needs and therefore is actually well served by low-cost Robo advising one of the my favorite commercials I saw for You know an advisor shows like a family on TV And you know, they're at their kid soccer game. They're eating dinner. They're getting ready for work And it's like you you know aren't a You know you're unique you need unique advice and I'm like no that wasn't unique like that's what we all do We all have dinner and we all go to work Do some things with our kids like I think you're making the case for Robo advice there And so they're trying to create this idea that no no you don't you know You need something special when in reality like People have actually very similar needs and what they need is to have as much money as possible in retirement and low-cost Advising can do that right so I would like to say just from a slightly different perspective one point out that it was actually The fiduciary advisory community as a whole I mean the the financial planning Community has for years been allies in the fight to raise the standard of conduct and groups like the CFP board and whatnot were strong Allies in addition to the Robo's and I think we made a tactical error By pointing to the Robo advisors I think they're an important part of the solution, but it made it very easy I just sat in a hearing in the house financial services committee last week where one of the Republicans well I don't know about you, but my mom doesn't want a robot to give them advice and neither do I you know and and The issue here is not You know Robo advisors as I said technology has been Harnessed by all sorts of advisors to automate portions of what they do so that you know Maybe the future is not just so much Robo advisors is you know cyborg advisors or whatever, you know because what you see is in Technology being incorporated into practices that are that include that human contact that people want The other thing I think where technology really offered a solution on this is people say well, how am I supposed to? You know comply with this best interest standard you want In the wake of the DOL rule we saw dozens maybe hundreds of Services rollout jobs created that were then destroyed when the rule was destroyed, but I digress That were designed to aid on this compliance side, you know, not just the advising itself But how do you compare a 401k plan menu to the available IRA? Investments and determine which would be the best option for the investor. How do you? Analyze that and document the basis for your decision So I think there's a lot of roles for technology to play in this area Yeah, and I think there's In my mind there's an even larger point. I think this is absolutely right It's it's an important component of a solution. It's not you know the end all be all what it says to me It exemplifies the adaptability of the financial services industry What that really means is that and you can trace this history back to the Great Depression Almost a hundred years a pattern and a practice of resisting regulatory reform by saying the sky will fall Our industry will collapse and the public will suffer if these regulatory forms go into place And what we saw with the advent of the DOL rule Unfortunately for such a short period of time, but still even in that short span of time We saw the lie being put to these horrific claims that the industry could never adapt that advice would be too expensive Etc. Etc. Robo advisors technology solutions of Several different varieties We're part and parcel of that But it really is the larger point that that all the fear mongering is just that and and It's important to be keenly aware that this undergirds a lot of industry's resistance and it's phony At heart. All right, so we have 30 minutes. So we can open up to the audience for Q&A Thank you Thank you. I have been a financial advisor for 20 years So I've seen a lot of that I've seen 20 years worth of regulations changed and I was so excited With the fiduciary rule because I'm in an industry that is dominated average age of a financial advisor is about 55 56 it varies and predominantly White males and when I'm in trainings or just out and about doing my financial advisor Checkups The the language. Oh my god. I'll have to meet with my clients every year Oh my goodness, you know, how am I supposed to live without a seven percent commission? Those of us who use this fiduciary standard were so excited and we're also let down As financial advisors that the rule was killed or you know shifting over to the Let's buy the sec language, but I just want to say thank you keep up the good work I was hoping that a lot of those guys would just give up and retire Yeah Many did many did And the ones that stuck in there have they're right back to these same You know bad old days, so please. Thank you. Keep up the well I mean, that's an important point that as I said, it wasn't just the robos who were supportive of this rule There is a community of advisors out there who embrace their fiduciary obligations Who argue for a stronger interpretation of the advisors act fiduciary standard than the sec adopts You know who takes seriously their obligation to avoid conflicts of interest to manage the remaining conflicts of interest to the best Interest in the best interest of their customers, so we greatly appreciate those of you in the in the profession who who live up to that standard every day And you know, I feel for you having to compete in an industry against a bunch of cheaters And that's why it's not fair. And I think that is You know why? It makes a lot of sense that people who are trying to do the right thing who are doing the right thing Want to have a set of rules so that everybody's doing the right thing because it does make it really hard For financial advisors who are giving good advice in their client's best interest and charging a fair price To compete against somebody who's lying about what they're charging lying about what the person's going to pay And giving bad advice that when you are making stuff up You can make it sound a whole heck of a lot sexier than when you're actually telling the truth Hello, can you hear me? Yes. Oh great She was talking about I've been in the business for 38 years Of course, I started when I was two years old I'd like to mention that when I started out with Decided to go as an independent broker You're right on that the broker dealers had the contest had the quotas In fact, they even went to proprietary products so that we would have a choice of going outside of med life outside of equitable, but they still had Your best commissions on the products that they push even if it was for lunch and learn Now I'd like to mention also that Prospectuses is very difficult for people to understand and that's something that need to be and also My question when you had mentioned that that People stay with the company. They've retired. That's an advantage and a disadvantage Especially with the city of Detroit that went into bankruptcy and all of their 403 B plans went down the tubes But my concern is and maybe you can help me with this the I Understand that it would have been much more arbitration With the DOL as far as Advises were concerned that we would have to up our Eno coverage so I'm wondering exactly how that arbitration thing would work. Thank you So I can jump in on that one. So the DOL will simply affirmed the the standard on arbitration that exists under the securities laws, which was that They permitted as the SEC and FINRA permit brokers to include predispute binding arbitration clauses in their contracts The there's I mean I think the argument that that arbitration would go up is you know that the number of claims would go up was Unfounded like many of the claims. So first of all the primary claim brought in FINRA arbitration today against broker dealers is violation of fiduciary duty even though Theoretically brokers don't have fiduciary duty. They're being held to that standard under common law fiduciary standards already to the degree that the DOL rule was successful in causing firms to rein in all of these Toxic incentives that encourage and reward advice that is not in customers best interests. There would be a lot Fewer incentives for bad advice. There would be fewer Of the kind of problem practices that land people in arbitration. So I actually think the There is a reasonable argument. We won't know because we don't have the The case histories to say but there is a reasonable argument that it would had it been embraced by industry it would have Decreased their liability exposure rather than increased it. Yeah, and just to be clear The argument about the fear mongering, I guess really about increased liability Arbitrations and so forth stem partly from what the DOL did in trying to create a remedy a meaningful remedy For the IRA owners and the idea was look if you're an advisor to an IRA owner under this rule And you want to charge commissions you may but then you have to enter into a contract which says I'm a fiduciary I will look after your best interest and if you breach that contract Then the IRA account owner has a right As he as hears he absolutely should to hold that advisor accountable That's what spawned this notion that it's going to be an explosion of Claims if you will but for reasons that that Barb said That underlying premise was bogus and to the extent that there really was going to be You know more claims and liability. It was going to actually Reform practices and it was going to make injured investors whole so it was it was a win-win from our standpoint So I just wanted to address the issue about rolling over a 401k or 403 B And of course you brought up the city of Detroit You know I gave the example of the federal TSP because I don't think the federal government's going bankrupt anytime soon And if it does we got some big problems that go beyond retirement savings But and so I thought that that was a really excellent example of a secret shopper But if you want a broader study in 2011 the GAO Did an investigation where they called around and asked for advice and Most of the call centers recommended a rollover without getting any specific information about the fees They were paying where the money was at what their circumstances were Another about a Roughly half of them said that oh, yes, you could roll over because we have free IRAs no fee free And talked about Had no, you know without clearly explaining any kind of investment transaction or other fees would still apply They simply emphasize that their IRAs were free Or had no fees with a minimum balance. So it's that kind of misleading advice that I was referring to It is no not everybody should leave their 401k where it is But I think people are encouraged to rollover a much more than is in anyone's best interest And those weren't fly-by-night operations. Those were the big Providers who were engaged in that conduct Sure Dana Muir from the Ross School It seems that some states are with you in Believing the SEC is not doing enough. Do you think states will make some progress here or will the SEC rule preempt all of the states efforts? Excellent question There are there are two things that happened recently at this on this state In the state arena one is that the Association of State Regulators Sent a letter to the SEC. This is a bipartisan reflects the bipartisan makeup of the you know state governments To the SEC arguing that unless it strengthened and clarified its exist its proposal It was simply going to perpetuate the problems that they see every day at the state level there You know, they're very concerned about the inadequacies of the SEC proposal There are a few states that have decided to step in and see if they can adopt laws at the state level that would Provide protections for their citizens that that are not provided under they don't believe would be provided under the SEC Standard Nevada is sort of out ahead. There was a legislative Solution there, New Jersey is going through a regulatory process. They've had some hearings. We don't know what they're gonna propose New York did something targeted at insurance, you know at annuities and insurance type investments That's currently in court. I think there are two things that will determine whether we see more Oh, and and Maryland has a legislative proposal, but hasn't been acted on There are two things that I will think will determine whether we see more of that. The first is will the SEC Improve its rule because if the SEC were to step in and fix some of these key shortcomings I think the step the states would be happy to step back and defer to a strong uniform federal standard The other thing is whoever goes first is Is gonna get sued, you know, they're gonna face exactly the same kind of legal challenge that that DOL did The the law in question in the securities arena is Nizmia the National Securities Markets Improvement Act which Includes some preemption of state authority, but it's actually quite narrowly drawn It's mostly to deal with those kinds of things like capital standards and whatnot That are logically set best set at a uniform federal level and Specifically and preserve state authority to regulate broker dealer conduct One area that is preempted by Nizmia is States are preempted from from creating books and records requirements that are not required under federal law so the the industry would argue will argue that They can't even if the state doesn't explicitly Impose books and records requirements as a part of their rule and they won't you know They're smart enough to avoid falling into that trap The industry will argue that it is implied that in order to comply with the the law. They have to Create these books and records. I think their flaws in that argument one There's actually already fairly extensive documentation requirement under know your customer and suitability rules that you could use for this purpose the other is that There's no end to that argument like if you can argue that anything that you might do to comply is is by definition Reason to preempt the lie it I think it sort of overwhelms the argument. So I think The states would have a strong defense, but this hasn't previously been litigated And I think the DOL had a really strong defense and we you know So we we've seen what can happen in the court system But I think those you know will if if what if a state Perseveres gets challenged and wins a good decision in court then I think you'll see more states Step in if the SEC doesn't adopt a stronger standard Good morning, my name is Terry Friedline. I'm from the school of social work here and my question is about the regulatory floor So you've mentioned technology a bit and I think technology increasingly creates, you know more complex tools for wealth accumulation and you know pensions 401ks retirement planning You know are some opportunities for wealth accumulation that are too often Available to you know most people that that live in the country You know, that's a it's a financial product and a service that You know really isn't widely accessible and with added technology It relies on institutions to generate that wealth That's mostly ensconced into the accounts of white wealthy investors and I think Can contribute to the racial wealth divide that we see is expanding and I think this panel and the panel earlier You know have been talking about You know the regulatory floor and I'm interested from your perspectives How that floor can really be cemented? So, you know, hopefully not just thinking about the bare minimum But you know really like a step above a floor that is really solid and stable and is expanded So that more people are standing on it So I'll jump in first So before I came to CFA low these many years ago I was on the board of the Denver food bank coalition So I worked on helping people get through emergencies with a basic amount of food in the middle of the Reagan recession And then I went to CFA to work on how to make rich people richer by Protecting them from abusive practices because when I started in 86, this was not a middle-income issue You know, I think that you know working on investor protection issues at most you're dealing with about Half the population, you know, like something like isn't the median amount that people have saved for retirement zero I can't protect someone with no retirement savings from abusive practices in the retirement market I think there is a whole set of things we need to be doing to rethink the way we fund People's retirements to rethink the way we provide people with adequate income to live on in their retirement years that shouldn't expose them to these abusive practices and it's not It's not my area of expertise But I think it's of it in and I have like you probably notice I speak with this just a fair amount of passion I have devoted 30 years to it It is a far more prompt Impressing problem to figure out how we are going to help people live a basically decent standard of living in retirement then making sure that you know Rich people don't get ripped off, but this is increasingly a middle-class problem We haven't it's not a low-income problem, but it is increasingly a middle-class problem because This is now how we we fund retirement accounts. So we're increasingly seeing people with You know with much more modest means being brought into this system So I don't I don't feel like I've answered your question, but that's the perspective that I bring to those issues Yeah, I think Barbara I share a lot of that perspective so the the reason I think that This conflicted advice issue has become so salient is because the middle-class increasingly rely on their retirement savings to fund their retirement so You know a a much smaller portion of middle-class baby boomers will be relying on some kind of pension And instead will be relying on what they saved So We're no longer talking about transfers among the rich when it comes to To conflicted advice, but we're talking about transfers from the middle-class to the rich and this becomes a bigger I think more pressing social problem But there's another social problem, which is that we do not we have in a retirement savings program That is Designed to bolster the retirement savings of the most well-off and that doesn't have to do with conflicted advice That has to do with the tax preferences that we have set up for retirement savings So, you know we fund retirement savings through giving you know, essentially a matching grant To people who save for retirement and that matching grant is a function of your highest marginal tax rate So your if you're rich you get the biggest grant and if you're poor you get zero That's our retirement savings plan and that's terrible And so I think we we even know not only is it terrible because it's putting both as you know more federal dollars towards Rich people's retirement savings, but it also Actually doesn't really work. So if what we're trying to do is spend tax dollars in order to increase retirement savings We know that tax preferred accounts is like the least effective way we could do We need to be incentivizing people on the margin. We need to be incentivizing people who don't have any retirement savings We do not need to be doing dollar-for-dollar matching of the very richest people So that's a different issue than conflicted advice, but very much a real one Quick point is We have a system in a country where a majority of people can't come up with $400 to get through an emergency Realize on them to take money out of their paycheck to fund their retirement. How effective do you think that works for that portion of the population? Yeah, I mean, you know Barb and Betsy are absolutely right that our retirement savings problems sort of extends, you know beyond conflicted advice and You know, we sort of have an institutionally terrible system sort of one kind of Moderating fact and it's not fully moderating, but it's just the fact that you know for a lot of middle-class households You know their homes Provide, you know some element of retirement security and so even if they may not have assets, you know They still have their house, but of course that's you know fraught with a lot of challenges and risks and you know different Populations build equity in their homes at different rates or depending on how they're able to time the cycle And we know that you know the availability of credit is pro cyclical and so you know who gets access during boom times when returns are low You know, it's it's low-income people Who are sort of like swapped in and so? You know, there are a lot of challenges and problems with that But you know for a lot of people who don't have access to pensions and you know DC plans and Other employer-based savings, you know, they have their homes And that's also part of the the challenge in sort of you know helping households build a secure retirement Is that it had that the solution have to be really really multi-pronged I? I will just that reminds me about what I think is the most ironic thing about the regulatory environment around retirement right now Which is that at the time that you know the DOL rules being vacated The current administration also decided to vacate the DOL Guidance which said states could start to set up retirement plans for people who didn't have them through their employer And they didn't need to worry about the risk of fiduciary standards So all of a sudden like the current administration super concerned about fiduciary standards if we're talking about a State trying to give access to retirement savings to poor people just not so concerned about people getting it through Through financial advisors why the apparent difference of opinion well because a lot You know the financial services industry thought that they would lose out to these state plans And it would be the state plans would divert profit from them to the states So the the view on where the fiduciary duty seems to be Always sides with is the financial services industry going to make more money or less money off this and they go in the You know whatever direction means more money for financial services Turns out financial incentives matter who knew Okay I'm gonna now raise a very sad really sad topic which was the my array product which some of us worked on Which is now defunct And in fact, I'm reading about it. It looks like those who had my array accounts have been rolled over into a Roth IRA with the private firm retirement clearinghouse LLC What did we do wrong? What could we have done differently and is the government Potentially this new Anchor by which we are trying to enable those half of Americans who have no savings as a starter retirement product Starter savings product. This was actually one of my biggest criticisms We're talking about retirement to people who have no concept that they were of a reach retirement It's a highly aspirational for a lot of people should we've even thought about renaming it and calling it something different But generally the idea of using the federal government not to mention your point about the auto enrollment programs at the state levels, but using government as Not only thinking about the tax changes that would be warranted to make this more equitable But government as a way to anchor facilitate Savings for at least the sort of mid to longer term So So, I mean what we did wrong is we lost an election you know But beyond that I do think there's a fundamental flaw in all of these approaches to go back with with what we were Talking about before that relies so heavily on people coming up with the money to save Coming up with the money to save now for retirement that they can't imagine getting to and And There may well be some different messaging that you can do around that that Helps with that. I CFA has a program that we Sponsor is called America Saves. It's designed to get low and moderate income people to save and build wealth Identify a goal set a plan save for that plan and a tremendous amount of thought has gone into the development of Messaging in that. How do you how do you encourage people to to do that? So I recommend it as if you're interested in seeing a sort of program out there that can be effective But I do think there's a fundamental problem It as long as we restrict ourselves to thinking about this in terms of how are we going to have? But have people who don't have enough money to fix a flat tire if they get one Start saving toward retirement. It's not going to work Yeah, and if I could just sort of pick up on that a little bit I think we've learned just you know based on sort of better data and better measurement over the last, you know a few years that You know people households have Faced a lot of month-to-month volatility in their income and their forced order challenge sort of beyond, you know Like planning for retirement and how great life is going to be and like the golden years is just like managing through that Like sort of volatility and and to me that's sort of like the basic, you know sort of first-order problems like how do you you know help? Households budget so that they don't have these like financial emergencies and sort of have this, you know You know liquid savings or some buffer stock savings that they can top tap into for emergencies and you know and that's some combination of you know policies and budgeting tools and you know Certainly there's a role for technology And stuff like that, but I don't see us really cracking like the retirement Not until we sort of solve that basic budgeting issue. I applauded You know that Ambitions associated with that program, but I had a lot, you know the concern is that Low-income people that actually need the money right now and if they don't need it, right? Yeah Yeah, yeah Yes But low-income people You know, there is this whole issue of trying to get people to save not for retirement But for the rainy day, which we know is coming and so I do think thinking about products that That help, you know as Jane just said learn to budget and learn to save is the first place to go And I think we really do need to to rethink like What do we need? Who needs what to top up social security because some people don't need a lot of additional savings in addition to social security if we have a robust enough social security system so some of these Reforms have to be thought about in terms of that broader picture of how are we how are we managing retirement savings? How much are we spending on it? How much of it is going through tax preferences and how much of it is going through a social security spending? Yes, hi Wondering what role do you feel the educational community should play going forward in facilitating financial literacy in general? so This is actually sort of that if when I retire my new pet project The leading cause of dropouts in Colorado Where I live and I live in a town with a 35 percent high school dropout rate is That students can't get even a non-college prep diploma without passing algebra, and we can't apparently teach algebra so they can pass So for a non-college prep high school graduate Couldn't we have a basic consumer finance math class teaching? you know math concepts around percentages on loans and I I mean so Which isn't an so much an investment concept, but it's some of this basic Consumer literacy issues, and I think at least in I'm at least in our school system in Colorado And I'm sure there are others that do it better elsewhere But there's very little thought given to that and by the way it might have some added benefits because some of the worst victims in our current retirement system our Teachers in 403 B plans that are larded up with high-cost annuities that are taking Expenses that are so high they're eating up all of the potential returns So we're taking people who are underpaid Who are going into their own private savings to buy school supplies for their classes and then putting them in the pretty Much the worst retirement system we have out there So if we did engage the education community, maybe we get some side benefit there as well Can I add one thing before we end and I think that the final sort of segment of this panel has been very interesting on some policy Questions that go beyond just the fiduciary duty and so forth and and consistent was a better markets core mission One thing that we that we should always bear in mind is Nothing is going to harm Investors Americans at at every level Especially at the low end as much as The kind of economic upheaval that came about in 2008 and it's a sober reminder that all these problems You know require different policy solutions but you can't really make any headway unless you ensure the stability the fundamental stability of the financial system and That's why we mustn't forget that lesson and and while we protect investors We also have to fight against Deregulation on the diaphragm reforms. That's why it's so key That's great. Can we acknowledge our panelists? Thank you