GOOD MORNING. WELCOME TO PANEL ON INVESTOR PROTECTION. MY NAME IS ANDREW WU. ASSISTANT PROFESSOR OF TECHNOLOGY AND OPERATIONS AND ASSISTANT PROFESSOR OF FINANCE AND ROSS SCHOOL OF BUSINESS. AT ROSS AND ALSO IN COLLABORATION WITH MULTIPLE SCHOOLS ACROSS CAMPUS, WE HAVE LUNGED MULTIPLE FINN TECH INITIATIVE AIMED AT PUTTING US AT THE FOREFRONT OF EDUCATION. ACTION BASED LEARNING PROGRAMS THAT PLACE STUDENTS DIRECTLY IN FINN TECH START-UP AND COLLABORATIVE RESEARCH WITH LEADING PETITIONER. ON THE CONSUMER SIDE TECHNOLOGY HAS REALLY BROUGHT A DAZZLING AND COMPLEX ARRAY OF NEW PRODUCTS AND TECHNOLOGIES ON ALL FRONTS OF A CONSUMER'S FINANCIAL LIFE. FROM PAYMENT TO CREDIT AND LENDING TO INVESTMENT AND TO FINANCIAL PLANNING AND ADVISORY. FOR INSTANCE, ROBO ADVISORS THE PRACTICE OF ALGORITHMICALLY PROVIDING ADVICE BASED ON THE CLIENT'S FINANCIAL SITUATION AND RISK TOLERANCE AND AUTOMATICALLY EXECUTED THE ADVICE FOR A FRACTION OF THE FEES CHARGED BY HUMAN ADVISORS. THAT HAS BECOME 100 BILLION-DOLLAR INDUSTRY LAST YEAR. AND IT'S POISED TO BECOME A TRILLION DOLLAR INDUSTRY IN THE NEXT FIVE YEARS. YOU KNOW AFTER THE CRYPTAL BUBBLE HAS BURST THERE'S NEW PRODUCTS. STABLE CRYPTOCURRENCIES 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 RISK THAT POTENTIALLY HAS HUGE IMPLICATIONS FOR BOTH THE INVESTORS THEMSELVES AND ALSO THE MARKET. SO TODAY WE HAVE A DISTINGUISHED PANEL OF EXPERTS ON CONSUMER INVESTOR PROTECTION AND WE WILL EXPLORE THE CURRENT REGULATORY LANDSCAPE AS WELL AS RECENT DEVELOPMENTS IN CONSUMER PROTECTION. AND HOW NEW TECHNOLOGICAL INNOVATION EFFECT THE DIRECT 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 WILL 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. I GUESS IN MY FIRST QUESTION FOR MANY OF YOU ON THE PANEL, WE HAVE BEEN SEEING FOR YEARS THAT THE STANDARD OF CONDUCT FOR FINANCE PROFESSIONALS IS THE MOST IMPORTANT STEP AND FOR POLICY MAKERS COULD TAKE TO IMPROVE PROTECTIONS FOR THE AVERAGE RETAIL CONSUMERS AND INVESTORS. WHY IS THIS SO IMPORTANT? I WILL JUMP IN. I'M BARBARA ROPER. INVESTOR FOR THE CONSUMER FEDERATION OF AMERICA. 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 FCC IN 1999. AND I'M SURE WE'RE GOING TO GET IT SOLVED ANY DAY NOW. IF YOU THINK ABOUT THE INVESTMENT MARKETPLACE OUT THERE. THERE IS AS YOU SAY AN ENORMOUS. ONE OF THE THINGS WE DO REALLY WELL IS INNOVATE. THERE'S A PRODUCT FOR EVERY NEED YOU MAY HAVE. SOMETIMES HUNDREDS OR THOUSANDS OF PRODUCTS FOR YOU TO CHOOSE FROM TO PROVIDE CAPITAL GROWTH OR INCOME OR WHATEVER IT IS YOUR INVESTMENT GOAL IS. AND WHAT WE KNOW ABOUT MOST INVESTORS THEY DON'T HAVE THE FINANCIAL SOPHISTICATION TO LOOK AT THOSE AVAILABLE INVESTMENTS AND DETERMINE WHICH ONES ARE THE BEST FOR THEM. AND DURING THAT PERIOD SINCE -- WHEN I STARTED IT CFA THERE WAS QUITE A SMALL PERCENTAGE OF THE POPULATION THAT INVEST. IT'S NOW THE AWE FUND OUR RETIREMENT. IT'S THE WAY WE FUND OUR CHILDREN'S CHILD EDUCATION. THE INVESTOR WHOSE ARE OUT IN THIS MARKETPLACE ARE FINANCIALLY UNSOPHISTICATED. THEY TURN TO FNL FINANCIAL PROFESSIONAL TO MAKE THE CHOICES. IF YOU HAVE $100 OR A FEW MILLION. IF YOU WANT ONE TIME ADVICE ABOUT WHAT TO DO ON ROLLOVER OR COMPREHENSIVE PLANNING. IF YOU WANT TO PLAY ASSET FEE OR RETAINER FEE THERE'S A BUSINESS MODEL OUT THERE WITH YOU IN MIND. BUT MOST OF THE PEOPLE OUT THERE WHO ARE COMPETING FOR YOU BUSINESS CALL THEMSELVES FINANCIAL ADVISORS, MARKET THEIR SERVICES AS LONG-TERM TRUSTED ADVICE DEDICATED TO ACTING IN YOUR BEST INTEREST. 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 ADVISOR WHOSE ARE OUT THERE WHO ARE SUPPOSED TO APPARENTLY ACT IN YOUR BEST INTEREST AT ALL TIMES CANNOT DISCLOSE OR NEGOTIATE THAT OBLIGATION AWAY, AS ENFORCED BY THE FCC ALL THEY HAVE TO DO IS DISCLOSE TO YOU THE WAYS IN WHICH THEY ARE NOT GOING TO ACT IN YOUR BEST INTEREST AND THEY HAVE SATISFIED THEIR FIDUCIARY OBLIGATION. WE HAVE A POPULATION THAT'S VULNERABLE THAT IS USING THE MARKET FOR VITALLY IMPORTANT PURPOSES. RELYING ON FINANCIAL PROFESSIONAL WHO AREN'T HELD TO STANDARD OF CONDUCT EVEN REMOTELY ADEQUATE TO PROVIDE ADEQUATE PROTECTION. CAN I JUMP IN. I'M STEVE HALL. WE'RE A GROUP IN EXISTENCE SINCE AND REALLY FOR MUCH OF OUR EARLY YEARS OF ADVOCACY WE'RE FOCUSED ON MAKING SURE THE FINANCIAL SYSTEM WAS TABLE AND COULD AVOID ANOTHER DEVASTATING FINANCIAL CRISIS LIKE THE 2008 NIGHTMARE. BUT, IN FACT, THIS ISSUE, TO ECHO A LOT OF BARB WAS SAYING REALLY IN OUR MINDS TOOK ON SUCH AN IMMENSE IMPORTANT GRAVITATIONAL PULL THAT WE GOT HEAVILY ENGAGED IN THE FIDUCIARY RULE. AND I THINK TO RECAPITULATE IT'S ABOUT PROTESTING 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 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 EXPLOITED PREDATORY BEHAVIOR AMONG MORTGAGE BROKERS AND MORTGAGE LENDERS. AND IT'S IMPORTANT TO SEE THAT THE VALUE OF INVESTOR PROTECTION IS CRITICAL IN AND OF ITSELF BUT IT ALSO HAS A KIND OF NEXUS TO THE REST OF THE FINANCIAL WORLD AND A FINANCIAL MARKETPLACE. AND THE OTHER FOOTNOTE I WANTED TO ADD. IN A WAY IT'S SORT OF DISCOURAGING. BECAUSE WE HAVE A ENOUGH OF A CHALLENGE FACING US IN TERMS OF TRYING TO GET THE FCC TO DO A MUCH BETTER JOB WHAT IS CURRENTLY A TERRIBLE RULE, WE THINK IT'S ALL ALSO IMPORTANT STILL NOT TO LOSE SIGHT OF THE FACT THAT IN THE END EVEN A VERY STRONG STANDARD HAS GOT TO BE ENFORCEABLE IN A MEANINGFUL WAY. WE MUSTN'T LOSE SIGHT OF THE FACT THAT THE CHALLENGES ASSOCIATED WITH MANDATORY ARBITRATION, LOSS OF ACCESS TO THE COURT SYSTEM, WE HAVE TO KEEP THOSE IN MIND AND FIGHT ON THAT FRONT AS WELL. LET ME JUMP IN WITH JUST A LITTLE BIT OF DATA TO TRY TO BOLSTER WHAT YOU TWO WERE JUST SAYING. CONSUMERS I THINK DO RIGHTFULLY THINK WHEN SOMEONE SAID THEY ARE GIVING THEM ADVICE, THAT IT'S ADVICE. NOT A SALES PITCH. SOMETIMES PEOPLE WOULD SAY TO ME LIKE, WHY DO WE NEED TO REGULATE ADVISORS. YOU KNOW WHAT YOU ARE GETTING WHEN YOU GO TO USED CAR DEALER. IMAGINE IF THEY MARKETED THEMSELVES AS TRANSPORTATION ADVISORS. COME TO ME TO FIGURE OUT THE BEST BUS ROUTES. WE SORT OF -- THAT'S A LAUGHABLE IDEA. BUT ESSENTIALLY THERE ARE FINANCIAL ADVISORS THAT, THAT IS WHAT THEY ARE BASICALLY DOING. SO WHAT DOES THAT MEAN? I DIDN'T INTRODUCE MYSELF. I'M BETSEY STEVENSON ASSOCIATE PROFESSOR IN THE DEPARTMENT OF LABOR IN BOTH CAPACITY GETTING INVOLVED IN THIS RULE. AND WHEN I WAS AT CEA JANE DOKKO AND I PUT TOGETHER A ROBERT TO TRY TO QUANTIFY WHAT WAS GOING ON IN THE INDUSTRY. THE THING THAT REALLY STRUCK ME IS THAT REALLY A LOWER BOUND OF ESTIMATE RETIREES END UP WITH 5 TO 10% LESS SAVINGS BECAUSE OF CONFLICTED ADVICE. AND I SAY THIS AS A LOWER BOUND ESTIMATE. IMPERACLE SCHOLARS WE WANT TO SHOW CAUSAL EFFECTS. WE'RE NOT TRYING TO FIGURE OUT THE EXACT MAGNITUDE OF THE EFFECT. WE'RE TRYING TO SHOW ALL THE PLACES IN I 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 TYPICAL PERSON INVESTING OVER A 30-YEAR PERIOD AND DRAW DOWN THEIR RETIREMENT ASSETS. THEY WILL RUN OUT OF ASSETS ABILITY FIVE YEARS EARLIER. YOU MENTIONED WHAT DOES THIS MEAN FOR THE FINANCIAL STABILITY. WHAT DOES THIS MEAN FOR OVERALL FINANCIAL STABILITY OF THE FEDERAL GOVERNMENT. WHO WILL 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 ARE NOT JUST TAKING MONEY FROM THE BABY BOOMERS. THEY ARE TAKING MONEY FROM ALL OF US BECAUSE I THINK THERE'S A ENORMOUS PRESSURE FOR THE FEDERAL GOVERNMENT TO STEP IN AND HELP THESE FOLKS OUT WHEN THEY RUN OUT OF MONEY. WE ALL HAVE A VESTED INTEREST IN SOLVING THIS PROBLEM. HI, MY NAME THE JANE DOKKO. I WANTED TO INTRODUCE MYSELF AND I ALSO OFFER YOU KNOW A SOMEWHAT DIFFERENT PERSPECTIVE. I'M AN ASSISTANT VICE PRESIDENT OF THE BANK OF CHICAGO. MY PARTICIPATION IS ON BEHALF OF MYSELF AS A CONCERNED CITIZEN AND NOT ONLY BEHALF OF ANYONE ELSE. I'M GLAD, BETSEY THAT YOU REMEMBER THE ESTIMATES. THEY'VE BEEN BURIED SORT OF DEEP IN MY MIND. I'VE KIND OF JUST -- KIND OF JUST 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 FIVE YEARS AGO AND SORT OF WHAT'S HAPPENED TO YOU KNOW SORT OF THE FATE OF PROTECTING CONSUMERS AND SAFERS FROM THE CONFLICTS TAKING SORT OF DEPRESSIONING TOLL. I'M GLAD THAT YOU REMEMBER THAT. I GUESS YOU KNOW THE OTHER PERSPECTIVE THAT I BRING IS AS SOMEONE THAT WORKED ON HOUSEHOLD FINANCIAL DECISION MAKING AND SORT OF STUDIED HOW PEOPLE MAKE DECISIONS ON BEHALF OF THEMSELVES, AND IT'S NOT JUST VULNERABLE POPULATIONS THAT GETS SWINDLED INTO BAD INVESTMENTS OR YOU KNOW COMPLEX ANNUITIES, WHERE THEY SNEEZE AND THEN THEY LOSE ALL THEIR MONEY. I MEAN THESE PROBLEMS EXTEND TO A BROAD SWATH OF SAVERS AND RESEARCH SHOWS THAT THERE'S A LOT OF COMPLEXITY IN FINANCIAL MARKETS. AND DREW ALLUDED TO THIS EARLIER WHEN HE DESCRIBED TECH THAT LOCKCAL INNOVATION THAT CHANGED THE LANDSCAPE FOR FINANCIAL ADVICE. PART OF THE REASON THE IMPACT ON SAVERS ARE SO LARGE IS THE MISTAKES THAT PEOPLE CAN MAKE AND SORT OF THE SET OF VULNERABLE PEOPLE IS REALLY LARGE. FOR THOSE IN THE AUDIENCE WHO HAS ABOUT DONE KEPT UP WITH THE REGULATORY UPDATES. THERE HAS BEEN A SIGNIFICANT CHANGE IN THE REGULATORY LANDSCAPE IN THE INVESTMENT ADVISORY MARKET. SO BASICALLY IN 2015 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. YOUR HELD WITH A STANDARD THAT YOU NEED TO PUT YOUR CLIENTS INTEREST STRICTLY ABOVE YOURS. IT DOESN'T MATTER IF YOU'RE A BROKER PAID ON COMMISSION OR INSURANCE AGENT OR ADVISOR. THIS WOULD HAVE TREMENDOUS IMPACT ON THE COMMISSION-BASED BROKERS AND ADVISORS WHO ARE MOSTLY HAS BEEN REGULATED BY FINRA AND HELD A LOWER STANDARD. THIS WOULD IMPACT THE COMPLIANCE STRUCTURE OF THE ENTIRE FINANCIAL ADVISORY AS A WHOLE. THE FINANCIAL INDUSTRY REALLY FOUGHT TOOTH AND NAIL AND AGAIN THIS AND AFTER REALLY PROTRACTED SERIES OF LEGAL BATTLES AND THE RULE WAS ESSENTIALLY VACATE BAD I THE FIFTH CIRCUIT COURT. LAST YEAR AND WAS EXPECTED TO BE REPLACED BY THE FCC'S REGULATION WHAT'S CALLED THE REGULATION BEST INTEREST. WHICH IS ESSENTIALLY A WEAKER VERSION OF THIS. AND THAT'S EXPECTED TO BE RELEASED BY THE FALL. SEVERAL OF OUR PANELEST ARE ACTUALLY INSTRUMENTAL IN CREATING THIS FIDUCIARY RULE. I WOULD LIKE TO HEAR SOME OF YOUR INCITES ON THE CREATION OF THIS RULE AND ITS RATIONALE. AND ITS RELATION FOR THE -- WITH CONSUMER PROTECTION AND -- ESPECIALLY IN THE CURRENT AGE. LET ME START AND THEN I WILL TURN IT TO YOU GUYS. BUT FIRST OF ALL I'M JUST GOING TO DISAGREE. THAT IT WAS A SWEEPING RULE. I'VE WATCHED WHAT WAS HAPPENING IN OTHER COUNTRIES UK AND NETHERLANDS. THEY ARE SWEEPING WOULD BE BANNING COMMISSIONS AND WHAT THIS WAS TRYING TO DO. YOU CAN TAKE YOUR COMMISSION BUT YOU STILL HAVE YOUR CLIENT'S INTEREST FIRST. YOU NEED TO MEET A BEST INTEREST STANDARD. 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 PLAN. WHICH MEANT THEIR EMPLOYER OFFERED THEM SOME KIND OF RETIREMENT PLAN AND IT ESSENTIALLY A PENSION THAT WOULD PAY THEM SOME FIXED AMOUNT. THEY DIDN'T HAVE TO WORRY ABOUT THE RETURNS. THAT WAS THEIR EMPLOYER'S JOB TO WORRY ABOUT THE RETURNS. BECAUSE THEY WERE TOLD WAS THE BENEFIT THEY WERE GETTING. IN THE STARTING IN THE 1970'S. WE STARTED HAVING DEFINED CONTRIBUTION PLANS 401(K)S AND THEY ARE STILL TIED TO PEOPLE'S EMPLOYERS. AND SO THAT HAS BEEN THE BIG SHIFT IS TO 401(K)S THAT GET ROLLED OVER INTO IRA'S. WHEN YOU ASK YOU KNOW WHERE THIS CONFLICTED ADVICE COMING FROM. MY FAVORITE STUDY WAS A GUY WHO HAD HIS MONEY A SECRET SHOPPER WHO HAD HIS MONEY IN THE FEDERAL GOVERNMENT'S THRIFT SAVING PLAN. THE LOWEST FEE PLAN YOU COULD POSSIBLY HAVE. THE GUY CALLS NINE ADVISORS AND SAID SHOULD I ROLL IT INTO IRA OR LEAVE IT WHERE IT IS. EIGHT OF THE NINE SAY YOU NEED TO ROLL IT. SO THAT -- THAT'S THE -- THAT IS THE CHANGING LANDSCAPE. I THINK DOL -- IF YOU WANT TO KNOW WHY IT'S OPPOSED SO MUCH BY INDUSTRY IT COMES BACK TO THAT 5 TO 10% THEY TAKE OUT OF RETIREMENT SAVERS. WE ESTIMATED 17 BILLION A YEAR. PEOPLE ARE GOING TO FIGHT LIKE HELL OVER 17 BILLION A YEAR. FINANCIAL INDUSTRY DOESN'T WANT TO GIVE THAT BACK TO RETIREES. IT'S A TOUGH REGULATORY NOT TO CRACK. BUT 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 INTEREST ARE GOING TO BE THE FRONT OF PEOPLE'S MINDS. JUST TO JUMP IN REALLY QUICKLY BEFORE BARB, I KNOW YOU HAVE A LOT OF INTERESTING THINGS TO SAY ON THIS TOPIC. I WANT TO PUSH BACK ON THE IDEA IT WAS SWEEPING. IT'S NOT SWEEPING. BECAUSE IT'S IT WAS JUST TARGETED AT RETIREMENT PRODUCTS. LOTS OF PEOPLE GET FINANCIAL ADVICE FOR LOTS OF THINGS THAT ARE NOT RELATED TO RETIREMENT. THE RULE DIDN'T TOUCH THAT. I JUST LIKE TO SAY I THINK WHAT THE INDUSTRY FOUND SO THREATENING ABOUT THE DOL RULES NOT THE WORDS BEST INTEREST BUT THE DOL MEANT THE WORDS "BEST INTEREST." YOU KNOW, WHEN THEY -- SERIOUSLY. IT SOUNDS LIKE A JOKE. BUT IT'S ACTUALLY TRUE. FINRA DESCRIBES THEIR SUITABILITY STANDARD AS REQUIRING BROKERS TO MAKE RECOMMENDATION CONSISTENT WITH THE BEST INTEREST OF THEIR CUSTOMER AND PREVENTING THEM FROM PLACING THEIR OWN INTEREST AHEAD OF THE CUSTOMER. THAT'S HOW THE FCC DESCRIBES THE FIDUCIARY DUTY. THAT'S HOW DOL DESCRIBED ITS FIDUCIARY STANDARD. AND SO THE WORDS ARE VIRTUALLY INDISTINGUISHABLE. WHEN DOL SAID "BEST INTEREST" THEY MEANT YOU HAVE TO LOOK WHAT 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 -- I THINK COMMENT FROM FINRA -- THEY SEEM TO THINK BEST INTEREST MEANS BEST INTEREST. YES. THAT'S BECAUSE OF THE INVESTOR. THE SECOND PIECE OF WHAT DOL DID THAT WAS SO IMPORTANT THEY SAID YES, YOU CAN HAVE YOUR -- YOU CAN GET YOUR COMMISSIONS. YOU CAN GET TRANSACTION-BASED PAYMENTS. BUT THIS BUSINESS OF SALES QUOTAS AND SALES CONTEST AND GETTING PAID 10 TIMES AS MUCH TO SELL THIS PRODUCT AS THAT PRODUCT. YOU GOT TO PUT SOME SERIOUS POLICIES AND PROCEDURES IN PLACE TO REIN IN THOSE CONFLICTS. YOU STARTED TO SEE BEFORE THE RULES DEMISED REAL CHANGES. 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 -- WHERE THE FEES SET BETWEEN THE BROKER AND THE ADVISOR, YOU KNOW AND THE CUSTOMER INSTEAD OF BY THE MUTUAL FUND DECIDING HOW MUCH THE BROKER WOULD GET PAID TO SELL ME A MUTUAL FUND. YOU REALLY STARTED TO SEE SOME INNOVATIVE CHANGES TAKING PLACE TO RING OUT SOME OF THESE EXCESS SIDE CONFLICTS IN THE BROKER DEALER BUSINESS MODEL. DISAPPEARED IN A FLASH WHEN THE RULE WAS OVERTURNED. AND THE SAME GROUPS THAT WENT INTO COURT TO SUE -- THE STOP THE DOL RULE ARE CHOMPING AT THE BIRTH TO PUSH FCC RULE THROUGH WHICH USES VIRTUALLY IDENTICAL WORDS BEST INTEREST CAN'T PLACE THE BROKER'S INTEREST AHEAD OF INVESTORS INTEREST BUT DOESN'T MEAN THAT. BEST INTEREST CERTAINLY DOESN'T MEAN YOU HAVE TO RECOMMEND THE BEST OF THE AVAILABLE PRODUCT. THE PROHIBITION OF PLACING THE BROKER'S INTEREST AHEAD OF THE CUSTOMER DOESN'T MAKE IT INTO THE SAFE HARBOR. IT'S THE CHIEF THING THE FCC USES TO SELL THEIR RULE. AND IT DOESN'T MAKE INTO THE SAFE HARBOR. EVERYTHING IS SO VAGUE AND UNDEFINED THAT WE I HALTS NO CONCRETE MEANING AND WE'VE SEEN HOW THAT ENFORCE SIMILAR CONCEPT IN THE ADVISORS CONTEXT AND THERE'S NO THERE THERE. THAT'S WHY THE RULES AFFLICT ON THE FCC RULE. THERE'S AN INTERESTING LEGAL PERSPECTIVE THAT COMES TO BARE HERE. BOTH THE RULE AND THE FCC RULE. WITH RESPECT TO DOL, THEY WERE DEALING AGAINST THE BACKDROP OF ARISA WHICH IS FAMOUSLY A STRONG STATUE WHICH RECOGNIZES THE FUNDAMENTAL IMPORTANCE OF CON FIRING SPECIAL PROTECTION ON RETIREMENT ASSETS, AND MAKE IT CLEAR THERE'S ABUNDANT AUTHORITY TO REQUIRE A BROAD FIDUCIARY STANDARD. ONE THING THEY WERE FACING AND ONE REASON WHY IT WASN'T AS SWEEPING AS IT COULD HAVE BEEN. NUMBER ONE A YEAR AFTER ARISA WAS PASSED IN '74, '75 COMES ALONG THERE'S INDUSTRY INFLUENCE THAT COMES TO BARE AND THEY PUT IN PLACE A RULE 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. REALLY FOR 40 YEARS, WHAT HAPPENED WAS INDUSTRIES PRACTICES, AND EXPECTATIONS BECOME ENTRENCHED. THE DOL HAD TO FIGHT AGAINST THAT. THE SECOND THING THEY WERE UP AGAINST. AND I THINK THEY REALLY DESERVE CREDIT IN PARTICULAR IN THE WAY THEY HANDLED THIS. THEY WANTED TO CONFER GREATER PROTECTION FOR IRA OWNERS. BECAUSE OF THE WAY ARISAS STRUCTURED IN TITLE 2 WHICH DEALT IRA ACCOUNTS THEY DIDN'T HAVE THE SAME AUTHORITY TO ACT. THEY TOOK SOME VERY CREATIVE STEPS I THINK BY ALL ACCOUNTS TOO CREATIVE ACCORDING TO INDUSTRY AND THREE-JUDGE PANEL OF THE FIFTH CIRCUIT TO REALLY TRY TO FIX THAT GAP. AND IT WAS AN ADMIRAL EFFORT. I THINK WE CAN TALK LATER ABOUT THE LAWSUITS. A LOT OF INTERESTING OBSERVATIONS THERE. ON THE FCC FRONT, QUICKLY. IT'S DISAPPOINTED BECAUSE IN DODD FRANK CONGRESS GAVE THE FCC 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 PERSPECTIVE. THEY LASHED ON TO THE WEAKEST STATUTORY AUTHORITY ON WHICH TO PREDICATE THEIR RULE. SO FOLLOWING UP ON THAT, ABOUT FCC RULE. YOU KNOW JUST FROM BOTH LEGAL PERSPECTIVE AND ALSO FROM AN ECONOMIC PERSPECTIVE. DO YOU THIS RULE COULD BE IMPROVED? YOU KNOW, FROM ON THESE PERSPECTIVES AND ALSO IF YOU WERE CHIEF ECONOMIST AT THE FCC WHAT WOULD YOU DO TO MAKE THIS RULE BETTER IN TERMS OF INVESTOR PROTECTION? YEAH. TO STEVE'S POINT WE FUNDAMENTALLY DISAGREE WITH THE APPROACH THE FCC TOOK IN THE LEGAL AUTHORITY THEY USED. BUT WHAT WE INSTEAD OF FIGHTING THAT FIGHT, ALTHOUGH I THINK THAT'S MAKES THEM VULNERABLE IN COURT. INSTEAD OF FIGHTING THE FIGHT WE TRIED TO ENGAGE CONSTRUCTIVELY. YOU WANT TO RAISE THE STANDARD OF CONDUCT OVER THE SUITABILITY STANDARD. YOU SAY YOU WANT TO PREVENT BROKERS FROM PLACING THEIR INTEREST AHEAD OF THEIR CUSTOMERS INTEREST. HERE ARE THE CHANGES YOU WOULD NEED TO BE MAKE IN YOUR RULE AN IMPORTANTLY YOUR TERMS OF THE RECALL TO ACHIEVE THAT. THE FIRST ONE IS TO YOU DON'T 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 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 -- IF 1,000 MUTUAL FUNDS SATISFY SUITABILITY BEST INTEREST SHOULD BE SATISFIED BY I DON'T KNOW TEN OR 20. IT'S NEVER GOING TO BE JUST ONE PERFECT INVESTMENT. BUT IT OUGHT TO BE A NARROWING DOWN OF THE INVESTMENTS. THE SECOND IS IF YOU WANT TO PREVENT BROKERS FROM PLACING THEIR INTEREST AHEAD OF THE CUSTOMERS LET'S GET THAT INTO THE OPERATIONAL PROVISIONS OF THE RULE THAT FULLY SATISFIED COMPLIANCE. AND THE WAY TO DO THAT IS TO TAKE WHAT'S ALREADY THE BEST PROVISION IN THE RULE. ONE OF THE THINGS THAT IT DOES. IT SAYS BROKERS HAVE TO HAVE POLICIES AND PROCEDURES IN PLACE THAT ARE REASONABLY DESIGNED TO MITIGATE FINANCIAL CONFLICTS OF INTEREST. REASON POLITICAL ZINED TO DO WHAT. IT DOESN'T SAY. REASONABLY DESIGNED TO PUTTING 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 THE MITIGATION REQUIREMENT. THEN YOU MIGHT SEE SOME OF THESE THINGS LIKE THE SALES QUOTAS FOR THE SAIL OF PROPRIETARY PRODUCTS OR THE CONTESTS TO ENCOURAGE IF SALE OR REVENUE SHARING PAYMENTS. GETTING PAID MORE TO PUSH THE PRODUCTS THAT PAY THE FIRM MORE. WHATEVER. YOU MAY SEE SOME OF THOSE CONFLICTS ACTUALLY REINED IN. INDUSTRY THINKS THEY WILL BE ABLE TO PAPER OVER THOSE KIND OF CONFLICTS WITHOUT HAVING TO MAKE MEANINGFUL CHANGE. THEN THE THIRD ONE WHICH IS NECESSARY ACTUALLY TO ENSURE THAT THIS RULE DOESN'T WEAKEN EXISTING PROTECTIONS FOR INVESTORS. IS THAT BROKERS WHO ARE AN ONGOING DUTY OF TRUST AND CO COYFY -- CONFIDENCE NEED TO HAVE ONGOING DUTY JUST AS COURT FOUND THEY HAVE UNDER THE STATE COMMON LAW FIDUCIARY STANDARDS. BY SAYING THAT BROKER AUTOMATICALLY ABSOLUTELY AND EVERY CIRCUMSTANCE HAVE NO ONGOING DUTY AT THE END OF A TRANSACTION, THIS RULE ACTUALLY WEAKENS ONE OF THE FUNDAMENTAL PROTECTION THAT INVESTORS NOW GET. YEAH. I AGREE COMPLETELY WITH BARB OO ANALYSIS. I THINK HAND IN HAND WITH THAT, THAT THIS PROPOSED RULE RELIES MUCH TOO MUCH ON DISCLOSURE. THIS IS AUDIENCE IS VERY SO F SOPHISTICATED. IT'S ESPECIALLY TRUE AND THIS GOES BACK TO THEME WE TALKED ABOUT AT THE BEGINNING. YOU KNOW, FINANCIAL ADVICE TECHNICAL. IT'S COMPLICATED. IT'S ALMOST TO EXPECT DISCLOSURE TO SERVE THE BEST INTEREST OF AN INVESTOR WHO NEEDS ADVICE IS LIKE ASKING A PATIENT, RIGHT, TO BASICALLY TO EDUCATE THEMSELVES AND THEN MAKE THE DECISIONS ABOUT WHAT IT IS THAT THEY SHOULD DO TO LOOK AFTER THEIR HEALTH. THE ASYMMETRY THERE IS JUST ASTONISHING AND PEOPLE DON'T NECESSARILY THINK OF IT THAT WAY IN FINANCE BUT IT'S TRUE. AND THEN ON A YOU KNOW, THERE'S A WHOLE CLUSTER OF ISSUES AROUND DISCLOSURE. IT'S MAINLY EXCESSIVE RELIANCE ON DISCLOSURE AND SO HAPPENS DISCLOSURE TESTED THE TESTING IT HAS BEEN DONE BY INDEPENDENT ORGANIZATIONS CLEARLY INDICATES THAT THE DISCLOSURE REGIME IS WOEFULLY ADEQUATE. THE FCC DIDN'T DO HOMEWORK BEFORE THEY PUT OUT THE PROPOSAL. IT NEEDS AN ENORMOUS AMOUNT OF WORK. IF I COULD PICK UP ON THE POINT ABOUT DISCLOSURE. I AGREE WITH YOUR CHARACTERIZATION OF THE PROBLEMS WITH DISCLOSURE. AND I MEAN AS ECONOMIST THE IDEA YOU WOULD TRY TO ADDRESS FOUNDATIONAL PROBLEMS WITH INCENTIVE BY USING FINE PRINT IS SO BIZARRE TO ME. AND IN PART IT'S BECAUSE YOU KNOW THERE'S ALL THIS RESEARCH THAT SHOWS THAT YOU KNOW DISCLOSURE OFTEN HAVE UNINTENDED CONSEQUENCES IF BROKERS DISCLOSURES THAT THEY ARE CONFLICTED, YOU KNOW, THAT, SOMETIMES LEADS THE PEOPLE RECEIVING THE ADVICE TO TRUST THEM MORE, NOT LESS. I MEAN, THERE'S BEEN SORT OF INDEPENDENT STUDIES OF DISCLOSURE ON HOW SORT OF LIKE A PSYCHOLOGICAL LEVEL PEOPLE READ, HOW MUCH TIME D HEY THEY SPEND READING THE DOCUMENT. WHAT INFORMATION DO THEY RETAIN. VERSES NOT RETAIN. AND NONE OF THAT IS LIKE TERRIBLY OPTIMISTIC. BUT IT WILL CHANGE YOU KNOW INVESTORS BEHAVIOR. THAT'S REALLY JUST WHAT IS SO PROBLEMATIC ABOUT THE DISCLOSURE REGIME. THEY AIM TO SOLVE THE PROBLEM BY CHANGING YOU KNOW THE INFORMATION THAT INVESTORS GET AND CHANGING INVESTORS MAYOR WHEN WE HAVE A LOT OF EVIDENCE, YOU KNOW BETSEY CITED EARLIER. THE PROBLEMS ARE NOT AMONG PEOPLE WHO ARE TRYING TO SAVE AND WORK TOWARD A SECURER RETIREMENT. IT'S ON THE OTHER SIDE. SO LET ME JUST ADD A LITTLE BIT TO WHAT JANE WAS SAYING ABOUT DISCLOSURE. ALTHOUGH WE'RE ALL IN VEHEMENT AGREEMENT HERE. BUT I THINK I THINK MY NATURAL INCLINATION HAD BEEN FOR FULL DISCLOSURE. TURNS OUT THAT'S WRONG. WHEN WE WERE LOOKING AT THE DOL RULE, WE SPENT A LOT OF TIME THINKING ABOUT DISCLOSURE. WHAT WOULD BE A DISCLOSURE REGIME THAT WOULD WORK? I BECOME CONVINCED THAT DISCROW SHER -- DISCLOSURE WILL NEVER WORK. AND BAD DISCLOSURE WILL REALLY, REALLY HURT. HOW DOES IT HURT? STUDIES SHOW THAT PEOPLE HAVE A LITTLE BIT OF MORAL COMPASS. THAT MORAL COMPASS PREVENTS THEM FROM CHEATING PEOPLE COMPLETELY. BUT WHEN WE GIVE THEM DISCLOSURE THEIR MORAL COMPASS GETS WORSE BECAUSE THEY THINK I DISCLOSED. NOW THEY MORAL COMPASS SAID DON'T CHEAT THE OLD GUY. YOU TOLD THE OLD GUY WHAT TO EXPECT. THE PROBLEM IS THE BROKER DEALERS THEMSELVES ARE LESS CONSTRAINED BY THEIR OWN MORAL COMPASS. THEN ON THE FLIP SIDE THE CONSUMERS WHO ARE GETTING IT ARE THINKING, AS JANE MENTIONED, OH, WELL AT LEAST HE TOLD ME. MAYBE I CAN TRUST HIM MORE. I JUST WANTED TO CIRCLE BACK TO THAT, THAT RETIREMENT FOR A LOT OF PEOPLE IS REALLY STRESSFUL. I'M PRETTY SOPHISTICATED. AND I STILL DON'T LIKE TO THINK ABOUT MY RETIREMENT PLANNING. AND WHAT PEOPLE WANT IS SOMEONE THAT THEY CAN TRUST. THAT WILL GIVE THEM ADVICE THAT WILL TELL THEM WHAT TO DO SO THEY CAN STOP THINKING ABOUT THIS HARD PROBLEM. THAT TRUST IS A REALLY IMPORTANT PART OF THE RELATIONSHIP. AND YOU CAN'T HAVE IT IF THE PERSON DOESN'T HAVE YOUR BEST INTEREST AT HEART. YOU SHOULD NOT TRUST. AND I THINK THE ONLY DISCLOSURE I COULD GET MIND THE VERY BEGINNING LOOKING YOU IN EYE SAY DO NOT TRUST ME. NOTHING SAY IS TRUE. JUST FOLLOW UP ON THE POINT OF THINKING LIKE AN ECONOMIST. ECONOMICALLY STUDYING UNDERSTAND THE NATURE OF THE EXTENT OF SAD RICERY CONFLICT OF INTEREST. AND THAT CULMINATED IN AT THE WHITE HOUSE COUNSEL OF ECONOMIC ADVISORS REPORT THAT BASICALLY SAID, WELL THE COST THE INVESTORS UP TO 17 BILLION A YEAR. FCC RECENTLY PUT OUT A SERIES OF ECONOMIC ANALYSIS IN SUPPORT OF THE REC-B-I. IN PARTICULAR GIVEN THERE'S 11 ECONOMIST ON BIPARTISAN BASIS COME OUT AND WROTE A LETTER THAT POINTED OUT A SERIES OF FLAWS WITH THAT ECONOMIC ANALYSIS. WONDERING WHAT YOUR THOUGHTS ARE ON THAT. IT COULD BE IMPROVED. ALL ECONOMICS ANALYSIS CAN BE IMPROVED. THAT'S ALWAYS A GIVEN. I SPENT TIME READING THROUGH THEIR ANALYSIS. I WAS HESITATE TO CALL IT AN ANALYSIS. AND BECAUSE THE BASIC STRUCTURE OF IT WAS LET'S DENY THE PROBLEM EXISTS, AND THEN CONCLUDE THAT THE RULE HAS MINIMAL IMPACTS BECAUSE THERE'S NO PROBLEM. I'M SORRY IF GLOSSING OVER NUANCES AND COMPLEXITIES. THAT WAS SORT OF MY TAKE AWAY FROM IT. AND THEN YOU KNOW I STARTED TO THINK, WELL, WHY WOULD A FEDERAL AGENCY THAT IS YOU KNOW SORT OF BOUND BY GUIDELINES AND REGULATIONS TO PUT FORWARD BENEFIT COST ANALYSIS WHEN THEY PATROL MULLGATE NEW REGULATIONS. THAT CONSIDERS THE SOCIETAL BENEFIT AND HARMS OF REGULATION. THE POLITICAL ECONOMY CHALLENGES YOU KNOW WITHIN THE FCC. WHEREBY FACTUAL ANALYSIS COULDN'T INFORM THEIR POLICY DELIBERATIONS. THEN I JUST GOT DEPRESSED. THAT WAS MY TAKE AWAY OF THEIR ECONOMIC ANALYSIS. I WILL SPARE YOU THAT. THIS LETTER THAT ANDREW REFERRED TO. DATING BACK TO 1982 SUBMITTED A LETTER TO AGENCY SAYING YOU HAVEN'T DEFINED THE REGULATORY PROBLEM THAT YOU'RE TRYING TO SOLVE. AND HERE'S ARE SOME ISSUES YOU HAVEN'T CONSIDERED. LIKE THE IMPACT OF CONFLICT OF INTEREST ON ADVICE. FOR EXAMPLE, YOU HAVEN'T CONSIDERED THE AVAILABLE ECONOMIC EVIDENCE. I MEAN JANE IS RIGHT. TO CALL THIS AN ECONOMIC ANALYSIS APPLIES THAT THERE'S ANALYSIS. AND THERE'S NOT. I THINK WHEN I LOOK FOR THE EXPLANATION OF WHY IT'S SO LACKING, I THINK IT'S BECAUSE THE FCC IS FUND-RAISER 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 THAT ARE COMPLACENT IN THINKING THAT AS LONG AS THE BROKERS ARE HAPPY WITH THE RULE AND BELIEVE ME THEY ARE HAPPY, THEY DON'T HAVE ANY LEGAL RISK. I DON'T THINK THEY'VE ADEQUATELY WEIGHED THE DEGREE BY THE ADVISORS ARE UNHAPPY WITH THE RULE. THERE'S STILL EXPOSURE THERE. IT'S 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 TO CHALLENGE A RULE THEY DON'T LIKE IS COSTLY BUT MUCH EASIER AND THAT'S WHAT WENT INTO THAT CALCULATION. YEAH. ONCE AGAIN TO BRING A LITTLE BIT OF THE MORE LEGAL PERSPECTIVE. EVEN TO ISSUE OF ECONOMIC ANALYSIS. I LOVE THE WAY JANE PUT IT. IT'S REALLY SPOT ON. AND IF YOU LOOK AT HER POINTS AND THE OTHER POINTS ABOUT THE SHORTCOMINGS, THEY DON'T PASS MUSTER UNDER ANY OF THE LEGAL TEST THAT GOVERN WHAT AN AGENCY HAS TO DO TO JUSTIFY ITS RULES ON ECONOMIC GROUNDS. AND IN THE -- ONE OF THE BEDROCK PRINCIPLES OF ADMINISTRATIVE LAW AN AGENCY HAS TO CONSIDER ALL OF THE RELEVANT FACTORS. WE'RE STEPPING 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-CALL ECONOMIC ANALYSIS. EVEN IF YOU DRILL DOWN MORE TECHNICAL LEVEL THE SECURITIES LAW ARE EFFECT. THEY DON'T REQUIRE THE FCC TO CONDUCT AN DETAILED COST-BENEFIT ANALYSIS TO QUANTIFY AND MATCH UP AND BALANCE THEM. THE STATUTE DO REQUIRE THE FCC TO DO WHAT WE CAN ECCF ANALYSIS. TO CONSIDER THE IMPACT OF THE RULE ON EFFICIENCY, COMPETITION, CAPITAL FORMATION. AND EVEN UNDER THAT CLEAR-CUT STANDARD, THE AGENCY DID A DISMAL JOB AND THE ONE THAT STANDS O OUT. AND WE TALKED ABOUT THIS AT SOME POINT OR ANOTHER. THEIR COMPETITION ANALYSIS. WHAT'S GOING ON WITH THIS RULE. THERE ARE DESPERATELY PROTECTING AND PRESERVING TWO DIFFERENT STANDARDS FOR TWO GROUPS OF THE ADVISORY INDUSTRY THE BROKER DEALERS AND THE INVESTMENT ADVISOR. IT'S NOT A COHERENT COMPETITIVE OR LEVEL PLAYING FIELD. IT JUST FLIES IN THE FACE OF WHAT MAKES COMPETITIVE SENSE. FINALLY, YOU KNOW LITTLE KNOWN FACT IS THAT IN THE VERY SECTION THAT DETAILING THE FCC'S OBLIGATION TO DO THIS KIND OF CONSIDERATION OF ECONOMIC FACTORS IT SAID CRYSTAL CLEAR FIRST AND ABOVE ALL ELSE IN ESSENCE YOU HAVE TO CONSIDER THE PUBLIC INTEREST. AND SO NO MATTER WHAT THE FCC MIGHT TRY TO DO,EN IF IT WERE TO SORT OF DOT MORE I'S AND TRY TO MAKE THIS THING PASS MUSTER UNDER AN ECONOMIC TEST, WHAT THEY CAN CONTINUE TO GLOSS OVER IS THE MOUNTAIN OF EVIDENCE THAT THERE'S IMMENSE HARM BEING DONE AND UNTIL THEY GET TO THAT POINT THEY WILL NEVER BE ABLE TO HAVE THE FOUNDATION FOR A RULE. I THINK THE ONLY THING I WANT TO ADD TAKE IT BACK TO WHAT DID -- WHAT DID WE DO AT CEA. THAT WAS A REPORT THAT WASN'T DESIGNED TO BE A COST BENEFIT ANALYSIS OF A RULE AT ALL. IT WAS DESIGNED TO REALLY LAYOUT THE PROBLEM AS THE RESEARCH COMMUNITY INDEPENDENT RESEARCHERS HAD STARTED TO IDENTIFY. THERE'S A NUMBER OF PAPERS OUT 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? WE'VE TALKED ABOUT CONFLICTS. BUT WE HAVEN'T REALLY PUT 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. EXCESSIVE FEES FOR THEM AND THAT'S ONE OF THE THINGS THAT EATS DOWN PEOPLE'S RETIREMENT SAVINGS. THE OTHER THING WE SEE PEOPLE STEERED INTO OVERLY C CON -- COMPLEX HARDER TO SEE THE COST ADVISOR IS GETTING WHEN IT'S COMPLEX PRODUCT. YOU CAN LOOK EASILY AT A PASSIVE INDEX MUTUAL FUND AND SEE WHAT THE FEES ARE. IT'S MUCH MORE HARDER TO TEASE OUT WHAT YOUR PAYING WHEN IT'S A COMPLEX PRODUCT. YOU SEE PEOPLE STEERED INTO INAPPROPRIATE PRODUCTS FOR THEM. BECAUSE OF THE FACT THAT IT'S GOING TO GENERATE FEES FOR THE ADVISOR. THE COST TO THE PERSON IS NOT JUST THE FEES. BUT THE FACT THAT THE PRODUCT IS INAPPROPRIATE. IT'S GOING THROUGH SYSTEM MATTCALLY AND SAYING, LOOK THE RESEARCH SHOWS, THIS IS WHAT HAPPENS WHEN PEOPLE GET ACCESS TO CONFLICTED ADVICE. AND THERE'S ONE STUDY WHAT HAPPENED WHEN TAKE CONFLICTED ADVICE AWAY. AND RETIREMENT ACCOUNTS WENT UP. THAT'S NOT THE EVIDENCE AS FCC IS INTERESTED IN RIGHT NOW. AND WERE CALLED OUT ON THIS BY THE 11. I THINK -- THE CHIEF ECONOMIMENT. THEY WEREN'T JUST SENIOR ECONOMIST. FORMER SENIOR ECONOMIST. THEY WERE CHIEF COMMITEST AND CALLED OUT ON THE FACT THEY DIDN'T BRING THIS EVIDENCE TO BARE. JUST TO BE CLEAR. 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 FCC ECONOMIC ANALYSIS LIKE COMPARING DICK AND JANE TO PH.D. DISSERTATION. THEY ARE NIGHT AND DAY. SPEAKING REPORT. AFTER YOU RELEASED THE REPORT THERE'S ALMOST LIKE IMMEDIATE PUSH BACK ON THAT ANALYSIS. RIGHT. YOU KNOW, WHAT WAS YOUR REACTION? DID YOU EXPECT IT. WHAT IS YOUR -- IS THERE ANYTHING YOU LEARNED FROM THIS EXPERIENCE WITH ALL THE INDUSTRY KIND OF FOLLOW UP WITH THAT? JANE, YOU WANT THE GO FIRST. I MEAN, I GUESS I THINK YOU KNOW, FROM THE ADVICE THAT YOU KNOW, I GOT FROM BETSEY, WHO HAD SERVED IN GOVERNMENT BEFORE AND HAD WORKED ON THIS RULE OF THE YEARS. I THINK WE EXPECTED PUSH BACK. I DIDN'T APPRECIATE THE SCALE OF IT. I LEARNED I DON'T KNOW AFTER I LEFT GOVERNMENT THAT THE FINANCIAL INDUSTRIES SPENT A HEALTHY 7 FIGURE SUM FUNDING RESEARCH THAT WOULD UNDERMINE THE REPORT. THAT MIND ME FEEL I HAD DONE SOMETHING RIGHT. YOU FORGET THINGS IF FINGER QUOTES. THAT'S A GREAT WAY TO PUT IT. I THINK IT'S SIMPLE. THEY ARE MAKING A LOT OF MONEY OFF PEOPLE. THEY WANT TO KEEP MAKING MONEY OFF OF PEOPLE. THEY ARE, OF COURSE, WHEN YOU KNOW YOU RA VEHICLES THE EMPEROR HAS NO CLOSED. I THOUGHT THE SCALE OF PUSH BACK MEANT THAT WE WERE NOT WRONG. BUT WHEN IN ASSESSING THE SCALE OF THE PROBLEM. THAT'S WHY WHEN WE HAD GOOD EVIDENCE TO COME UP WITH 17 BILLION NUMBER THEY NEEDED TO FIGHT BACK AND THEY NEEDED TO TRY TO DISCREDIT OUT. I DON'T THINK THEY WERE SUCCESSFUL IN THAT IN ANY WAY. ONE THING INTERESTING ABOUT THAT THE REASON WE HAD FOCUS ON THE ECONOMIC ANALYSIS ON THAT AT ALL WAS BECAUSE ONE OF THE INDUSTRIES INITIAL TACTICS TO DEFEAT THE PROPOSAL THEY HADN'T ADEQUATELY ASSESSED THE ECONOMIC IMPACT. THEY NEEDED MORE DETAILED ECONOMIC ANALYSIS. THAT'S 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 DOL'S ANALYSIS HELD UP IN COURT. AND STEVE CAN TALK ABOUT THAT. IN COURT AFTER COURT AFTER COURT UNTIL EXTREME PAN NECESSARILY ONE COURT OVERTURNED IT. ONE OF THE REASONS, WE SEE SUCH A SHODDY ANALYSIS IF THEY DID A DIE CENT ANALYSIS THAT HAVE TO PROPOSE A DECENT RULE. ALL GOOD POINTS. MY OWN VIEW IS THAT THE INDUSTRY WAS NEVER SUCCESSFUL IN REALLY LAYING A GLOVE ON EVEN THAT MODEST 17 BILLION. AS A RESULT OF THAT, WHAT THEY HAD TO DO WAS RESORT TO A COUPLE OF OTHER DEEPLY MISLEADING MYTHOLOGIES TO FIGHT BACK AGAINST THE DOL'S RULE. IN VARIANCE OF THE SAME ARGUMENT ARE BEING DEPLOYED AGAINST FCC. THEY ARE MUCH MORE COMFORTABLE. THERE'S CONTEXT IS DIFFERENT. IT'S STRONG BROAD FIDUCIARY LIMITING ACCESS. IT'S JUST EXTRAORDINARILY KIND OF PERVERSE WAY OF LOOKING AT REGULATION. WHERE PAYDAY LENDER THE AGENCY IT SELF SAYING IF WE HAVE STRONG UNDERWRITING STANDARD IN PLACE PAYDAY LENDERS WILL GO OUT OF BUSINESS. AND PEOPLE WILL LOSE ACCESS TO CREDIT. IT'S A LITTLE BIT LIKE SAYING TO A MALNOURISHED STARVING PERSON DON'T YOU WANT TOMS OF THIS ROTTEN POISONOUS FOOT. IT DOESN'T MAKE SENSE WHEN YOU TAKE A CLOSE LOOK AT IT. THE OTHER THING THEY DID IN THE DOL CONTEXT THAT THE FCC WAS THE AGENCY THAT HAD THE EXPERTISE THE JURISDICTIONAL POWER TO DEAL WITH THIS ISSUE AND THERE'S YOU KNOW THERE'S HALF AED TO REASONS WHY THAT IS COMPLETELY WRONG. CONGRESS AND ARISA MADE IT CLEAR THE DOL HAS RESPONSIBILITY FOR RETIREMENT ACCOUNT. NOTHING THAT THE DODD FRANK HAD IT NEGATED THAT. IN FACT, IT REINFORCED THE NOEGS BY SAYING TO THE FCC WE WANT TO GIVE YOU GREATER AUTHORITY TO PROTECT INVESTORS WITH A FIGURES DUTY AND AT THE SAME TIME THEY SAID NOTHING ABOUT SAILING BACK THE AUTHORITY. NEITHER OF THOSE ARGUMENT MADE SENSE. BUT IN THIS CRAZY WORLD, THEY GOT TRACTION. I JUST WANTED TO ADD THE SMALL SAVER ARGUMENT JUST ALWAYS DROVE MY CRAZY. BECAUSE IT'S ESSENTIALLY THE ARGUMENT THAT IF PEOPLE KNEW HOW MUCH THEY WERE PAYING US FOR THIS ADVICE THEY WOULD STOP PAYING US FOR THIS ADVICE. OKAY. MAYBE. THAT SOUNDS GOOD. THEY SHOULD STOP PAYING IF THEY DON'T WANT TO. ONCE WE HAD DONE OUR ANALYSIS I THINK IT MADE IT EASIER TO TALK ABOUT THAT. IT WAS THE PROBLEM FIRST OF ALL IS WERE CHARGING THEM TOO MUCH. PEOPLE WERE ONLY WILLING TO PAY IT BECAUSE THE FEES WERE JUST SO HIDDEN. I LIKE TO THROW IN ONE SIDE NOTE. THE INDUSTRY GROUP THAT WENT INTO COURT TO CHALLENGE THE RULE THE BASIS FOR THEIR ARGUMENT WAS WE ARE NOTED A VASORS. WE NEAR SALES PEOPLE ENGAGED IN ARM'S LENGTH COMMERCIAL SALES TRANSACTION, NO DIFFERENT THAN A CAR DEALER. AND THE COURT BOUGHT IT. WHEN THEY ARE NOT IN COURT THEY ARE BACK TO BEING TRUSTED ADVISORS. THEIR ARGUMENT IS LESS COMPELLING. IF YOU PASS THIS RULE, YOU'RE WILL LOSE ACCESS TO BIASSED SELL RECOMMENDATION FROM A SALES PERSON WHO HAS INCENTIVE TO RECOMMEND THE PRODUCTS THAT ARE MOST PROFITABLE FOR THE FIRM INSTEAD OF THE ONES THAT ARE BEST FOR YOU. OH, NO. BEYOND THAT AND TO GET INTO AN ISSUE THAT ANDREW WOULD LIKE TO TALK ABOUT TECHNOLOGY HAS FUNDAMENTALLY CHANGED THIS EQUATION. NOT JUST THROUGH THE ADVENT OF ROBO ADVISOR BUT BY ALLOWING FOR THE AUTOMATION OF ADVICE THAT WERE ONCE LABOR INTENSIVE. WE HAVE A VARIETY OF OPTIONS AVAILABLE IN THE MARKETPLACE NOW WHERE ADVICE IS AVAILABLE UNDER A FIDUCIARY STANDARD AT VERY LOW COST TO VERY ACCOUNTS. AND SO IN THE UNLIKELY EVENT THE BROKER DEALERS THEY ALWAYS IF YOU I'LL TAKE MY BALL AND GO HOME. IN THE EVENT THEY WOULD ABOUT 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. WHEN THE FIDUCIARY RULE WAS FIRST INTRODUCED. FIRST PROPOSED. IT TURNS OUT THAT NOT VERY SURPRISINGLY THE ROBO ADVISORS WERE THE BIGGEST PROPONENTS WITHIN THE FINANCIAL SERVICE INDUSTRY. THEIR ARGUMENT THAT WELL IF IT RAISES THE STANDARD THE COST WILL GO UP. YOU KNOW I'M JUST WONDERING WHAT DOES THE PANEL THINK. IS ROBO ADVISOR THE COST. AND WHAT GENERAL RULE DOES TECHNOLOGY HAVE IN PLAYING THIS -- TO SOLVE THIS PROBLEM? I THINK THAT THE CHALLENGE IS THAT PEOPLE LIKE TO THINK THAT THEY ARE UNIQUE AND THEY WANT TO HAVE THAT TRUSTED PERSONAL RELATIONSHIP WHEN IT COMES TO RETIREMENT. BUT THE TRUTH IS THE TYPICAL PERSON HAS TYPICAL RETIREMENT NEEDS AND THEREFORE IS ACTUALLY WELL SERVED BY LOW COST ROBO ADVISING. ONE OF MY FAVORITE COMMERCIALS I SAW FOR YOU KNOW ADVISOR SHOWS THAT A FAMILY ON TV THEY ARE AT KIDS SOCCER GAME. GETTING READY FOR WORK. YOU AREN'T YOU'RE UNIQUE. YOU NEED UNIQUE ADVICE. THAT WASN'T UNIQUE. THAT'S WHAT WE ALL DO. WE ALL HAVE DINNER AND GO TO WORK. WE ALL DO SOMETHINGS WITH OUR KIDS. I THINK YOU MAKE THE CASE FOR ROBO ADVICE THERE. SO THEY ARE TRYING TO CREATE THIS IDEA NO, NO; YOU NEED SOMETHING SPECIAL WHEN IN REALITY YOU HAVE VERY SIMILAR NEEDS AND WHAT THEY NEED TO HAVE AS MUCH MONEY AS POSSIBLE IN ETIREMENT AND LOW COST ADVISING CAN DO THAT. I WOULD LIKE TO SAY JUST FROM A SLIGHTLY DIFFERENT PERSPECTIVE. ONE TO POINT OUT IT WAS ACTUALLY THE FIDUCIARY ADVISORY COMMUNITY AS A WHOLE. THE FINANCIAL PLANNING COMMUNITY HAS FOR YEARS BEEN ALLIES IN THE FIGHT TO RAISE THE STANDARD OF CONDUCT. AND GROUPS LIKE THE CFP BOARD WERE STRONG ALLIES. IN ADDITION TO ROBO. I THINK WE MADE A TACTICAL ERROR BY POINTING TO THE ROBO ADVISORS. I THINK THEY ARE AN IMPORTANT PART OF THE SOLUTION. IT MADE IT VERY EASY. I JUST SAT IN HEARING IN THE HOUSE FINANCIAL SERVICES COMMITTEE LAST WEEK WHERE ONE OF THE REASONS, I DON'T KNOW ABOUT YOU. MY MOM DOESN'T WANT ROBOT TO GIVE THEM ADVICE AND NEITHER DO I. THE ISSUE HERE IS NOT YOU KNOW ROBO ADVISORS TECHNOLOGY HAS BEEN HARNESSED BY ALL SORT OF ADVISOR TO AUTOMATE PORTION OF THAT THEY DO. SO THAT YOU KNOW MAYBE THE FUTURE IS NOT JUST -- MUCH ROBO ADVISORS AS YOU KNOW CYBORG ADVISORS. WHAT YOU SEE IS 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 COMPLY WITH BEST INTEREST STANDARD THAT YOU WANT. IN THE WAKE OF THE DOL RULE. WE SAW DOZEN. MAYBE HUNDREDS OF SERVICES ROLL OUT. JOBS CREATED THAT WERE THEN DESTROYED WHEN THE RULE WAS DESTROYED. I DIGRESS. WERE DESIGNED TO AID ON THIS COMPLIANCE SIDE. YOU KNOW NOT JUST ADVISING ITSELF. HOW DO YOU COMPARE 401(K) PLAN MENU TO IRA INVESTMENT AND DETERMINE WHICH WOULD BE THE BEST OPTION FOR THE INVESTOR. HOW DO YOU ANALYZE THAT AND DOCUMENT THE BASIS FOR YOU DECISION. I THINK THERE'S A LOT OF ROLES FOR TECHNOLOGY TO PLAY IN THIS AREA. I THINK THERE'S IN MY MIND THERE'S LARGER POINT. I THINK THIS IS ABSOLUTELY RIGHT. IT'S AN IMPORTANT COMPONENT OF SOLUTION. IT'S NOT THE END-ALL AND BE ALL. WHAT IT SAYS TO ME EXEMPLIFIES THE ADAPTABILITY OF THE FINANCIAL SERVICES INDUSTRY. WHAT THAT MEANS IS THAT YOU CAN TRACE THE HISTORY BACK TO THE GREAT DEPRESSION. A PATTERN AND PRACTICE OF REGULATORY REFORM BY SAYING THE SKY WILL FALL OUR INDUSTRY WILL COLLAPSE, AND THE PUBLIC WILL SUFFER IF THE REGULATORY REFORMS GO INTO PLACE. 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. ET CETERA, ET CETERA. ROBO ADVISOR, TECHNOLOGY SOLUTIONS OF SEVERAL DIFFERENT VARIETIES WERE PART AND PARCEL OF THAT. IT REALLY IS LARGER POINT THAT ALL THE FEAR MONEYING GERING IS JUST THAT. IT'S IMPORTANT TO BE AWARE THIS UNDER GEDS A LOT OF INDUSTRY RESISTANCE AND IT'S PHONY AT HEART. WE HAVE 30 MINUTES. WE CAN OPEN UP TO THE AWED BE -- AUDIENCE FOR Q&;A. THANK YOU. THANK YOU. I HAVE BEEN A FINANCIAL ADVISOR FOR 20 YEARS. I'VE SEEN A LOT OF -- I'VE SEEN CHANGE AND I WAS SO EXCITED WITH THE FIDUCIARY RULE BECAUSE I'M IN AN INDUSTRY THAT IS DOMINATED, AVERAGE AGE OF FINANCIAL ADVISOR IS ABOUT 55 OR VARIES AND PREDOMINANTLY WHITE MALES. AND WHEN I'M IN TRAININGS OR JUST OUT AND ABOUT DOING MY FINANCIAL ADVISOR CHECKUPS. THE LANGUAGE OH MY GOD I HAVE TO MEET WITH MY CLIENTS EVERY YEAR. OH, MY GOODNESS, HOW AM I SUPPOSED TO LIVE WITHOUT A 7% COMMISSION THOSE OF US WHO USE THIS FIDUCIARY STANDARD WERE SO EXCITED. AND WE'RE ALSO LETDOWN AS FINANCIAL ADVISORS THAT THE RULE WAS KILLED OR YOU KNOW SHIFTING OVER TO THE FCC LANGUAGE. I 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. MANY DID. MANY DID. AND THE ONES THAT STUCK IN THERE HAVE THEY ARE RIGHT BACK TO THE SAME BATTLE DAYS. PLEASE THANK YOU. KEEP UP -- THAT'S AN IMPORTANT POINT THAT AS I SAID IT WASN'T JUST THE ROBO SUPPORTIVE OF THIS RULE. THERE'S A COMMUNITY OF ADVISORS OUT THERE WHO EMBRACE THEIR FISSIONRY OBLIGATIONS, WHO ARGUE FOR A STRONGER INTERPRETATION OF THE ADVISERS ACT FIDUCIARY STANDARD. WHO TAKE 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 PROFESSION WHO LIVE UP TO THAT STANDARD EVERY DAY. YOU KNOW, I FEEL FOR YOU. HAVING TO COMPETE IN AN INDUSTRY AGAINST A BUNCH OF CHEATERS. THAT'S WHY IT'S NOT FAIR. AND I THINK THAT'S WHY IT MAKES A LOT OF SENSE THAT PEOPLE WHO ARE TRYING TO DO THE RIGHT THING, YOU ARE DOING THE RIGHT THING. WANT TO HAVE A SET OF RULES SO EVERYONE IS DOING THE RIGHT THING. IT MAKES IT REALLY HARD FOR FINANCIAL ADVISORS WHO ARE GIVING GOOD ADVICE AND THEIR CLIENTS PEST INTEREST AND CHARGING A FAIR PRICE; TO COMPETE AGAINST SOMEONE WHO LYING ABOUT WHAT THEY ARE CHARGING. LYING ABOUT WHAT THE PERSON IS GOING TO PAY. AND GIVING BACK BAD ADVICE. WHEN YOU ARE MAKING STUFF UP. YOU CAN MAKE IT SOUND A LOT SEXIER THAN WHEN YOU TELL THE TRUTH. IS THIS ON? HELLO. CAN YOU HEAR ME? YES. O OH, GREAT. I'M ONE OF THOSE PEOPLE SHE WAS TALKING ABOUT. I'VE BE IN THE BUSINESS FOR 38 YEARS. OF COURSE I STARTED WHEN I WAS 2 YEARS OLD. I WOULD LIKE TO MENTION THAT WHEN I STARTED OUT -- [INAUDIBLE] AND DECIDED TO GO AS AN INDEPENDENT BROKER. YOU'RE RIGHT ON THAT THE BROKER DEALERS HAD THE CONTEST AND QUOTAS. THEY EVEN WENT TO PROPRIETARY PRODUCTS SO WE COULD HAVE A CHOICE OF GOING OUTSIDE OF METLIGHT OUTSIDE OF EQUITABLE. THEY STILL HAD YOUR BEST COMMISSION ON THE PRODUCTS THAT THEY PUSHED. EN IF IT WAS FOR LUNCH AND LEARN. NOW I WOULD LIKE TO MENTION ALSO THAT PERSPECTIVES ARE VERY DIFFICULT FOR PEOPLE TO UNDERSTAND. AND THAT'S SOMETHING THAT NEED TO BE REWRITTEN. AND ALSO MY QUESTION WHEN YOU HAD MENTIONED THAT PEOPLE STAY WITH THE COMPANY, THEY RETIRED. THAT'S AN ADVANTAGE IN A DISADVANTAGE. ESPECIALLY WITH THE CITY OF DETROIT THAT WENT INTO BANKRUPTCY IN ALL OF # 03-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 ASKED AORS WERE CONCERNED THAT WE COULD HAVE TO ENO COVERAGE. I'M WONDERING EXACTLY HOW THAT ARBITRATION THING WOULD WORK. THANK YOU. I CAN JUMP IN ON THAT ONE IN THE DOL RULE SIMPLY AFFIRMED THE STANDARD ON ARBITRATION THAT EXISTS UNDER THE SECURITY'S LAW, WHICH WAS THAT THEY PERMITTED AS THE FCC PERMIT BROKERS TO INCLUDE PRE DISPUTE BINDING A ARBITRATION CLAUSES IN THEIR CONTRACTS. I THINK THE ARGUMENT THAT ARBITRATION WILL GO UP YOU KNOW THE NUMBER OF CLAIMS WOULD GO UP WAS UNFOUNDED LIKE MANY OF THE CLAIMS. SO FIRST OF ALL, THE PRIMARY CLAIM BROUGHT IN ASHTATION TODAY AGAINST BROKER DEALERS IS VIOLATION OF FIDUCIARY DUTY, EVEN THOUGH THEORETICALLY BROKERS DON'T HAVE FIDUCIARY DUTY. THEY ARE BEING HELD TO THAT STANDARD UNDER COMMON LAW FIGURESY STANDARDS ALREADY. TO THE DEGREE THAT THE DOL RULE WAS SUCCESSFUL IN CAUSING FIRMS TO REIN IN ALL OF THESE TOXICS INCENTIVE THAT ENCOURAGE AND REWARD ADVICE THAT IS NOT IN CUSTOMER'S BEST INTEREST. THERE WOULD BE A LOT FEWER INCENTIVE FOR BAD ADVICE. THERE WOULD BE FEWER OF THE KIND OF PRACTICES THAT LAND PEOPLE IN ASH STRAIGS. I ACTUALLY THINK THE -- THERE'S A REASONABLE ARGUMENT. WE WON'T KNOW. BECAUSE WE DON'T HAVE THE CASE HISTORY TO SAY. THERE'S 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 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 ARE AN ADVISOR TO IRA OWNER UNDER THIS RULE AND YOU WANT TO CHARGE COMMISSIONS, YOU MAY. 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 OR SHE SHOULD TO HOLD THAT ADVISOR ACCOUNTABLE. THAT IS WHAT IS SPAWNED THIS NOTION THAT IT WILL BE EXPLOSION OF CLAIMS IF YOU WILL. BUT FOR REASONS THAT BARB SAID THAT UNDERLYING PREMISE WAS BOGUS. AND TO THE EXTENT THAT THERE WAS GOING MORE CLAIMS AND LIABILITY IT WAS GO ACTUALLY REFORM PRACTICES AND IT WAS GOING TO MAKE INJURED INVESTORS WHOLE. IT WAS A WIN WIN FROM OUR STANDPOINT. I WANT TO ADDRESS. THE YOU ABOUT ROLLING OVER A UP THE CITY OF DETROIT. I DON'T THINK THE FEDERAL GOVERNMENT IS GOING BANKRUPT. IF IT DOES WE HAVE BIG PROBLEMS BEYOND RETIREMENT SAVINGS. AND SO I THOUGHT THAT WAS REALLY EXCELLENT EXAMPLE OF A SECRET SHOPPER. BUT IF YOU WANT BROADER STUDY IN INVESTIGATION WHERE THEY CALLED AROUND AND ASKED FOR ADVICE, AND MOST OF THE CALL CENTERS RECOMMENDED ROLLOVER WITHOUT GETTING ANY SPECIFIC INFORMATION ABOUT THE FEES THEY WERE PAYING. WHERE THE MONEY WAS AT. WHAT THEIR CIRCUMSTANCES WERE. ROUGHLY HALF OF THEM SAID OH, YES YOU CAN ROLL OVER BECAUSE WE HAVE FREE IRA. NO FREES. FREE AND TALKED ABOUT HAD NO YOU KNOW WITHOUT CLEARLY EXPLAINING ANY KIND OF INVESTMENT TRAN ACTION OR OTHER FEES WHICH STILL ALIVE. THEY SIMPLY EMPHASIZE THEIR IRA'S WERE FREE. OR HAD NO FEES WITH THEM MINIMUM BALANCE. IT'S THAT KIND OF MISLEADING ADVICE THAT I RUFR TO. IT'S NOT EVERYBODY SHOULD LEAVE THEIR 401(K) WHERE IT IS. THEY SHOULD ROLL OVER MUCH MORE THAN IS NUN'S BEST INTEREST. THOSE WANT FLY BY NIGHT OPERATIONS. THOSE WERE THE BIG PROVIDER ENGAGED IN THAT CONDUCT. SURE. DANA MUIR FROM THE ROSS SCHOOL. IT SEEMS SOME STATES ARE WITH YOU IN BELIEVING THE FCC IS NOT DOING ENOUGH. DO YOU THINK STATES WILL MAKE PROGRESS HERE OR WILL THE FCC RULE PREEMPT THE STATE'S EFFORTS. EXCELLENT QUESTION. THERE ARE TWO THINGS THAT HAPPEN READ -- RECENTLY IN THE STATE ASSOCIATION IN ASSOCIATION OF STATED REGULATORS. THIS REFLECTS THE BIPARTISAN MAKE UP OF THE STATE GOVERNMENTS. TO FCC ARGUING THAT UNLESS IT STRENGTHENED AND CLARIFIED IT'S PROPOSAL, IT WOULD PERPETUATE THE PROBLEMS THEY SEE EVERY DAY AT THE STATE LEVEL. THEY ARE VERY CONCERNED ABOUT THE INADEQUACIES OF THE FCC PROPOSAL. THERE'S A FEW STATES THAT DECIDED TO STEP IN AND SEE IF THEY CAN ADOPT LAWS AT THE STATE LEVEL THAT WOULD PROVIDE PROTECTIONS FOR -- THEIR CITIZENS THEY DON'T BELIEF WOULD BE PROVIDED. NEVADA AHEAD. THERE WAS A LEGISLATIVES SO LUGUES SESSION THERE. NEW JERSEY. THEY HAD HEARING. WE DON'T KNOW WHAT THEY WILL PROPOSE. NEW YORK DID SOMETHING Targeted AA INSURANCE. ANNUITIES AND INSURANCE TYPE INVESTMENTS THAT CURRENTLY IN COURT. I THINK THERE ARE TWO THINGS THAT WILL DETERMINE WHETHER WE SEE MORE -- AND MARYLAND HAS A LEGISLATIVE PROPOSAL BUT HASN'T BEEN ACTED ON. THERE ARE TWO THINGS I WILL DETERMINE WHETHER WE SEE MORE OF THAT. THE FIRST, WILL THE FCC IMPROVE ITS RULE? BECAUSE IF FCC WHERE TO STEP IN AND FIX SOME OF THESE KEY SHORTCOMINGS, I THINK THE STATE WOULD BE HAPPY TO STEP BACK. AND DEFER TO A STRONG UNIFORM FEDERAL STANDARD. THE OTHER THING, WHOEVER GOES FIRST IS GOING TO GET SUED. THEY WILL FACE EXACTLY THE SAME KIND OF LEGAL CHALLENGE THAT DOL DID. THE LONG QUESTION IN THIS SECURITIES ARENA IS THE NATIONAL SECURITY IMPROVEMENT ACT. WHICH INCLUDES SOME PRESUMPTION OF STATE AUTHORITY BUT IT'S QUITE NARROWLY DRAWN. IT'S MOSTLY TO DEAL WITH THOSE KINDS OF THINGS LIKE CAPITAL STANDARDS, AND WHATNOT. BETTER LOGICALLY SET BEST SET AS UNIFORM FEDERAL LEVEL. AND SPECIFICALLY AND PRESERVE STATE AUTHORITY TO REGULATE BROKER DEALER CONDUCT. ONE AREA THAT IS PREEMPTED IS STATE ARE PREEMPTED FROM CREATING BOOKS AND RECORDS REQUIREMENTS THAT ARE NOT REQUIRED UNDER FEDERAL LAW. SO THE INDUSTRY WOULD ARGUE, WILL ARGUE THAT THEY CAN'T -- EVEN IF THE STATE DOESN'T EXPLICITLY IMPOSE BOOKS AND RECORDS REQUIREMENTS. AND THEY WON'T. THEY ARE SMART ENOUGH TO AVOID THAT. THE INDUSTRY WILL ARGUE IT'S IMPLIED THAT IN ORDER TO COMPLY WITH THE LAW THEY HAVE TO CREATE THESE BOOKS AND RECORDS. I THINK THERE'S FLAWS IN THAT ARGUMENT. ONE THERE'S FAIRLY EXTENSIVE DOCUMENTATION REQUIREMENT UNDER KNOW YOUR CUSTOMER AND SUITABILITY RULES. THE OTHER IS THERE'S NO END TO THAT ARGUMENT LIKE IF YOU CAN ARGUE THAT ANYTHING THAT YOU MIGHT DO TO COMPLY IS BY DEFINITION REASON TO PRE PREEMPT THE LAW. IT’S OVERWHELMING THE ARGUMENT. THIS HASN'T PREVIOUSLY BEEN LITIGATED. AND I THINK THE DOL HAD A REALLY STRONG DEFENSE AND WE -- SO WE'VE SEEN WHAT CAN HAPPEN IN THE COURT SYSTEM. BUT I THINK THOSE WILL -- IF A STATE PERSEVERES, GETS CHALLENGED AND WINS A GOOD DECISION IN COURT, THEN I THINK YOU WILL SEE MORE STATES STEP IN, IF THE FCC DOESN'T ADOPT A STRONGER STANDARD. THAT'S ABOUT -- SPOT ON GOOD MORNING. MY QUESTION IS ABOUT THE REGULATORY FLOOR. SO YOU'VE MENTIONED TECHNOLOGY A BIT AND I THINK TECHNOLOGY INCREASINGLY CREATES MORE COMPLEX TOOLS FOR WEALTH ACCUMULATION. AND PENSIONS 401(K), RETIREMENT PLANNING. ARE SOME OPPORTUNITIES FOR WEALTH COMMUNICATION THAT ARE TOO OFTEN AVAILABLE TO YOU KNOW MOST PEOPLE THAT LIVE IN THE COUNTRY. IT'S A SERVICE THAT'S NOT WIDELY ACCESSIBLE. AND WITH ADDED TECHNOLOGY, IT RELIES ON INSTITUTIONS TO GENERATE THAT WEALTH THAT MOSTLY ENSCONCED TO THE ACCOUNTS OF WHITE WEALTHY INVESTORS AND CAN CONTRIBUTE TO THE RACIAL WEALTHY DIVIDE WE SEE THAT'S EXPANDING. THIS PANEL AND THE PANEL EARLIER YOU KNOW HAVE BEEN TALKING ABOUT THE REGULAR FLOOR. AND I'M INTERESTED FROM YOUR PERSPECTIVES HOW THAT FLOOR CAN REALLY BE CEMENTED. YOU KNOW HOPEFULLY NOT JUST THINKING ABOUT THE BARE MINIMUM. YOU KNOW REALLY LIKE A STEP ABOVE A FLOOR THAT THE REALLY SOLID AND STABLE. AND IS EXPANDED SO THAT MORE PEOPLE ARE STANDING ON IT. I WILL JUMP IN FIRST. BEFORE I CAME TO CFA. MANY YEARS AGO ON THE BOARD OF THE DENVER FOOD BANK COALITION. 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. WORKING ON INVESTOR PROTECTION ISSUES AT MOST YOUR DEALING WITH ABOUT HALF THE POPULATION. ISN'T THE MEDIAN AMOUNT PEOPLE HAVE SAVED FOR RETIREMENT ZERO. I CAN'T PROTECT SOMEONE WITH NO RETIREMENT SAVING FROM ABUSIVE PRACTICES AND THE RETIREMENT MARKET. I THINK THERE'S A WHOLE SET OF THINGS WE NEED TO BE DOING TO RETHINK THE WAY WE FUND PEOPLE'S RETIREMENT. THAT SHOULDN'T EXPOSE THEM TO THESE ABUSIVE PRACTICES. AND IT'S NOT EL IT'S NOT MY AREA OF EXPERTISE. BUT I THINK IT'S -- AND I HAVE LIKE YOU PROBABLY NOTICE. I SPEAK WITH A FAIR AMOUNT OF PASSION. I HAVE DEVOTED 30 YEARS TO IT. IT IS A FAR MORE IMPRESSING PROBLEM TO FIGURE HOW WE LET PEOPLE LIVE DECENT STANDARD LIFE IN RETIREMENT MAKING SURE RICH PEOPLE DON'T GET RIPPED OFF. THIS IS INCREASINGLY MIDDLE CLASS PROBLEM. IT'S NOT A LOW INCOME PROBLEM. IT IS INCREASINGLY A MIDDLE CLASS PROBLEM. BECAUSE THIS THE NOW HOW WE FUND RETIREMENT ACCOUNTS. WE'RE INCREASINGLY SEEING PEOPLE WITH YOU KNOW MUCH MORE MODEST MEANS BEING BROUGHT INTO THIS SYSTEM. I DON'T FEEL LIKE EYE ANSWERED YOUR QUESTION. THAT'S THE PERSPECTIVE THAT I BRING TO THOSE ISSUES. I THINK I SHARE A LOT OF THAT PERSPECTIVE. THE REASON I THINK THAT THIS CONFLICTED ADVICE ISSUE HAS BECOME SO SALIENT. THE MIDDLE CLASS RELY ON THEIR RETIREMENT SAVING TO FUND THEIR RETIREMENT. YOU KNOW A MUCH SMALLER PORTION OF MIDDLE CLASS BABY BOOMER WILL BE RELYING ON SOME KIND OF PENSION. INSTEAD WILL RELY ON WHAT THEY SAVED. WE NO LONGER TALK ABOUT TRANSFERS AMONG THE RICH WHEN IT COMES TO CONFLICTED ADVICE BUT 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 WE DO NOT -- WE HAVE IN A RETIREMENT SAVING PROGRAM THAT'S DESIGNED TO BOLSTER THE RETIREMENT SAVING OF THE MOST WELL OFF. THAT DOESN'T HAVE TO DO WITH CONFLICTED ADVICE. THAT'S THE TAX PREFERENCES THAT WE HAVE SET UP FOR RETIREMENT SAVINGS. WE KNOW FUND RETIREMENT SAVINGS THROUGH GIVING YOU KNOW ESSENTIALLY A MATCHING GRANT TO PEOPLE WHO SAVE FOR RETIREMENT AND THAT MATCHING GRANT A FUNCTION OF YOUR HIGHEST MARGINAL TAX RATE. IF YOU ARE RICH YOU GET THE BIGGEST GRANT AND IF YOU ARE POOR YOU GET ZERO. THAT'S OUR RETIREMENT SAVING PLAN. THAT'S TERRIBLE. I THINK WE EVEN KNOW NOT ONLY IS TERRIBLE BECAUSE IT'S PUTTING MORE FEDERAL DOLLARS TOWARDS RICH PEOPLE'S RETIREMENTS SAVING BUT IT ALSO ACTUALLY DOESN'T REALLY WORK. IF WE TRY TO SPEND TAX DOLLAR TO INCREASE RETIREMENT SAVING. WE KNOW 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 INCENT SIENGZ PEOPLE WHO DON'T HAVE RETIREMENT SAVING. WE DON'T NEED TO BE DOING DOLLAR FOR DOLLAR MATCHING OF THE VERY RICHEST PEOPLE. THAT'S A DIFFERENT ISSUE THAN CONFLICTED ADVICE BUT VERY MUCH A REAL ONE. WE HAVE A SYSTEM. IN A COUNTRY WHERE THE MAJORITY OF PEOPLE CAN'T COME UP WITH $400 TO GET THROUGH AN EMERGENCY. RELIES ON THEM TO TAKE MONEY OUT OF THEIR PAYCHECKS TO FUND THEIR RETIREMENT. HOW EFFECTIVE DO YOU THINK THAT WORKS FOR THAT PORTION OF THE POPULATION? I MEAN, YOU KNOW BARB AND BETSEY ARE RIGHT. OUR PROBLEM EXTENDS BEYOND CONFLICTED ADVICE. WE SORT OF AN INSTITUTIONALLY TERRIBLE SYSTEM. ONE KIND OF MODERATING FACT AND IT'S NOT FULLY MODERATING BUT THE FACT 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. THEY HAVE THEIR HOUSE. BUT OF COURSE THAT'S CHALLENGES AND RISK AND DIFFERENT POPULATIONS, BUILT EQUITY IF THEIR HOMES AT DIFFERENT RATES OR DEPENDING ON HOW THEY ARE ABLE TO TIME THE CYCLONE YOU KNOW THE AVAILABILITY OF CREDIT IS PRO CYCLICAL. WHO GETS ACCESS DURING BOOM TIMES WHEN RETURNS ARE LOW. IT'S LOW INCOME PEOPLE. WHO SORT OF SLEPT IN. THERE'S A LOT OF CHALLENGES AND PROBLEMED WITH THAT. FOR A LOT OF PEOPLE WHO DON'T HAVE ACCESS TO PENSIONS AND YOU KNOW D.C. PLANS AND OTHER EMPLOYER BASED SAVING THEY HAVE THEIR HOME AND PART OF THE CHALLENGE ANY SORT OF HELPING HOUSEHOLDS BUILD SECURE RETIREMENT IS THAT THE SOLUTION DOESN'T HAVE TO BE REALLY, REALLY MULTIPRONGED. THAT REMINDS ME ABOUT WHAT I THINK IS MOST IRONIC THING ABOUT THE REGULATORY ENVIRONMENT AROUND RETIREMENT NOW WHICH IS THAT AT THE TIME THAT YOU KNOW THE DOL RULE IS BEING VACATED, THE CURRENT ADMINISTRATION ALSO DECIDED TO VACATE THE DOL GUIDANCE WHICH SAID STATE COULD START TO SET UP RETIREMENT PLANS FOR PEOPLE WHO DIDN'T HAVE THEM THROUGH THEIR EMPLOYERS AND THEY DIDN'T NEED TO WORRY ABOUT THE RISK OF FIDUCIARY STANDARD. ALL OF A SUDDEN LIKE THE CURRENT ADMINISTRATION SUPER CONCERNED ABOUT FIDUCIARY STANDARDS IF WE ARE TALKING ABOUT A STATE TRYING TO GET ACCESS TO RETIREMENT SAVING TO POOR PEOPLE. JUST NOT SO KRNED ABOUT PEOPLE GETTING IT THROUGH FINANCIAL ADVISORS. WHY THE APPARENT DIFFERENCE OF OPINION? WELL, BECAUSE A LOT OF YOU KNOW THE FINANCIAL SERVICES INDUSTRY THOUGHT THEY WOULD LOSE OUT TO THE STATE PLANS AND IT WOULD BE THE STATE PLAN WOULD DIVERT PROFITS FROM THE STATE. THE VIEW ON WHERE THE FIDUCIARY DUTIES SEEMS TO BE ALWAYS SIDES WITH IS FINANCIAL SERVICES INDUSTRY GOING TO MAKE MORE MONEY OR LESS MONEY OFF THIS AND GO INTO WHATEVER DIRECTION MEANS MORE MONEY FOR FINANCIAL SERVICES. TURNS OUT FINANCIAL INCENTIVE MATTER. WHO KNEW? [LAUGHTER] I WILL NOW RAISE A SAD TOPIC WHICH IS IRA PROJECT WHICH SOME OF US WORKED ON WHICH IS NOW DEFUNCT. IN FACT I'M READING ABOUT IT. IT LOOKS THOSE WHO AT MIRA ACCOUNT HAVE BEEN ROLLED OVER TO ROTH IRA WITH THE PRIVATE FUND 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 SAVING PRODUCT. THIS WAS ACTUALLY ONE OF MY BIGGEST CRITICISMS. WE TALK ABOUT RETIREMENT TO PEOPLE WHO HAVE NO CONCEPT THEY WILL EVER REACH RETIREMENT. SHOULD WE HAVE THOUGHT ABOUT RENAMING IT AND CALLING IT SOMETHING DIFFERENT? GENERALLY THE IDEA OF USING THE FEDERAL GOVERNMENT NOT TO MENTION YOUR POINT ABOUT THE AUTO ENROLLMENT PROGRAM AT THE STATE LEVEL 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 FACILITY, SAVINGS FOR AT LEAST THE SORT OF MID TO LONGER TERM. I MEAN WHAT WE DID WRONG. WE LOST AN ELECTION. BUT BEYOND THAT, I DO THINK THERE'S A FUNDAMENTAL FLAW IN ALL OF THESE APPROACHES TO GO ABOUT WHAT WE WERE TALKING ABOUT BEFORE THAT RELY 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 THERE MAY WELL BE SOME DIFFERENT MESSAGING YOU CAN DO AROUND THAT. THAT HELPS WITH THAT. CFA HAS A PROGRAM THAT WE SPONSOR CALLED AMERICA SAVES. 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 ENCOURAGE PEOPLE TO THAT. I RECOMMEND IT AS IF YOU ARE INTERESTED IN SEEING SORT OF PROGRAM OUT THERE THAT CAN BE EFFECTIVE, BUT I DO THINK THERE'S A FUNDAMENTAL PROBLEM AS LONG AS WE RESTRICT OURSELVES TO THINKING ABOUT THIS IN TERMS OF HOW ARE WE GOING TO HAVE 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. IF I COULD PICK UP ON THAT A LITTLE BIT. I THINK WE'VE LEARNED JUST YOU KNOW BASED ON SORT OF BETTER DATA AND MEASUREMENT OVER THE LAST FEW YEARS THAT YOU KNOW PEOPLE HOUSEHOLDS HAVE LOT OF MONTH TO MONTH VOLATILITY. THE STARTER CHALLENGE BEYOND RETIREMENT AND HOW GREAT LIFE WILL BE AND THE GOLDEN YEAR IS MANAGING THROUGH THAT. SORT OF VOLATILITY. TO ME THAT'S LIKE THE BASIC YOU KNOW SORT OF FIRST ORDER OF PROBLEMS. HOW DO YOU HELP HOUSEHOLDS BUDGET SO THAT THEY DON'T HAVE THESE LIKE FINANCIAL EMERGENCIES AND SORT OF HAVE THIS LIQUID SAVING OR BUFFER SAVING THEY CAN TAP INTO FOR EMERGENCIES. AND YOU KNOW, THAT'S SOME COMBINATION OF POLICIES AND BUDGETING TOOLS AND YOU KNOW CERTAINLY THERE'S A RULE FOR TECHNOLOGY. AND STUFF LIKE THAT. BUT I DON'T SEE US REALLY CRACKING LIKE THE RETIREMENT NUT UNTIL WE SORT OF SOLVE THAT BASIC BUDGETING ISSUE. I APPLAUDED AMBITIONS ASSOCIATED WITH THAT PROGRAM. BUT I HAD -- THE CONCERN IS THAT LOW-INCOME PEOPLE ACTUALLY NEED THE MONEY NOW. AND IF THEY DON'T NEED IT. FLEXIBILITY OF 115 AGI. RIGHT. YES. LOW-INCOME PEOPLE THERE IS THIS WHOLE ISSUE OF TRYING TO GET PEOPLE TO SAVE NOT FOR RETIREMENT BUT FOR THE RAINY DAY WHICH WE KNOW THE COMING. BUT I THINK ABILITY THINKING ABOUT PRODUCTS THAT HELP YOU KNOW LEARN TO BUDGET AND LEARN TO SAVE. IS FIRST PLACE TO GO. THE OTHER THING WE NEED TO RETHINK. WHAT DO WE NEED. WHO NEEDS WHAT TO TOP OFF SOCIAL SECURITY? SOME PEOPLE DON'T NEED A LOT OF ADDITIONAL SAVINGS IN ADDITION TO SOCIAL SECURITY. IF WE HAVE A ROBUST SYSTEM. SOME OF THESE REFORMS HAVE TO BE THOUGHT ABOUT IN TERMS OF THAT BROADER PICTURE OF HOW ARE WE -- HOW ARE WE MANAGING RETIREMENT SAVING. HOW MUCH DO WE SPEND. HOW MUCH WILL GO THROUGH TAX PREFERENCES AND HOW MUCH GOES THROUGH SOCIAL SECURITY SPENDING. I'M WONDERING WHAT ROLE DO YOU FEEL THE EDUCATIONAL COMMUNITY SHOULD PLAY GOING FORWARD IN FACILITATE FINANCIAL LITERACY IN GENERAL? SO THIS ACTUALLY SORT OF -- WHEN I RETIRE MY NEW PET PROJECT. THE LEADING CAUSE OF DROPOUTS IN COLORADO WHERE I LIVE. I LIVE IN TOWN WHERE 35% HIGH SCHOOL DROP OUT RATE. STUDENTS CAN'T GETTEN A NONCOLLEGE PREP DIPLOMA WITHOUT PASSING ALGEBRA AND WE CAN'T TEACH IT SO THEY CAN PASS. FOR A NON COLLEGE PREP HIGH SCHOOL GRADUATE COULDN'T WE HAVE A BASIC CONSUMER FINANCIAL MATH CLASS TEACHING YOU KNOW MATH CON KREMENTS AROUND PERCENTAGES ON LOANS. I MEAN, SO WHICH ISN'T SO MUCH INVESTMENT CONCEPT BUT THE BASIC CONSUMER LITERACY ISSUE. I THINK AT LEAST AT LEAST IN OUR SCHOOL SYSTEM IN COLORADO AND I'M SURE THERE ARE OTHERS THAT DO A BETTER ELSEWHERE. 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 ARE TEACHERS IN 403-B PLANS HIGH COST ANNUITIES TAKING EXPENSES THAT ARE SO HIGH THEY ARE EATING UP ALL OF THE POTENTIAL RETURNS. SO WE'RE TAKING PEOPLE WHO ARE UNDERPAID, WHO ARE GOING INTO THEIR OWN PRIVATE SAVING TO BUY SCHOOL SUPPLIES FOR CLASSES AND PUT THEM IN THE WORST -- THEM IN THE WORST RETIREMENT. CAN I ADD ONE THING. THE FINAL SORT OF SEGMENT OF THIS IS INTERESTING ON POLICY QUESTIONS. THAT GO BEYOND JUST THE FIDUCIARY DUTY AND SO FORTH. AND CONSISTENT BETTER MARKET CORE MISSION ONE THING THAT WE -- THAT WE SHOULD ALWAYS BARE IN MIND IS, NOTHING IS GOING TO HARM INVESTORS, AMERICANS 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 OF THESE PROBLEMS YOU KNOW REQUIRE DIFFERENT POLICIES 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 MUST NOT FORGET THAT LESSON. WHY WE PROTECT INVESTORS WE HAVE TO FIGHT AGAINST DEREGULATION ON THE DODD FRANK REFORMS. THAT'S WHY IT IS SO KEY. CAN WE ACKNOWLEDGE OUR PANELIST THANK YOU FOR YOUR TIME. [APPLAUSE]