“You do understand the function of the magician’s assistant, don’t you?”
“Yeah. She’s there to distract them as he sets up the trick.”
That exchange occurs between characters played by Morgan Freeman and Mark Ruffalo in the 2013 film Now You See Me.
If you prefer a musical reference here’s a favorite Pearl Jam lyric we often quote:
“All the rusted signs we ignore throughout our lives. Choosing the shiny ones instead.”
Somewhere between Aaron Rodgers’ discount double checks and Jake’s 3am phone call (“What are you wearing Jake from State Farm?” “Uh, khakis.”) State Farm has decided to stop selling retirement products.
Why? Because it’s in the best interests of customers of course. Ha!
The truth is State Farm cannot comply and does not want to comply with the Department of Labor’s fiduciary rule that will go into effect in April.
Previously firms would not provide advice. Instead they would sell products for which the standard was suitability. Any advice they provided was purely incidental and more often than not was nothing more than sales support – justification for selling a product to a customer.
The new standard requires firms to provide advice and do so in the best interest of the customers. The product-pushers find this model too expensive. They prefer to get out of the business altogether.
That’s fine . . . but to hide this reality in corporate BS about better serving customers? C’mon!
If customers are willing to buy something there’s always a firm willing to sell it to them. Hence State Farm’s dalliance with mutual funds. It speaks to why they’re getting out of the business.
The typical State Farm rep is not providing advice. He or she is simply selling a product. That’s almost always home or auto insurance and, occasionally, life insurance. They get away with it because customers view insurance as a commodity. They don’t know to ask for advice. They’re simply price focused. Discount double check anyone? With the fiduciary rule looming the cost and effort to turn reps into advisors is too great relative to the commissions and kickbacks for selling and distributing mutual funds.