Adviser Twitter fight erupts when Dave Ramsey bashes DOL fiduciary rule

One widely followed radio show host’s opposition to the Labor Department’s proposed rule to raise investment advice standards for retirement accounts sparked backlash from investment advisers on Monday.

Dave Ramsey, the founder of Ramsey Solutions and host of “The Dave Ramsey Show,” criticized the measure from President Barack Obama’s administration, implying it would raise advice costs and price out savers with modest accounts.

“This Obama rule will kill the middle class and below[‘s] ability to access personal advice,” Mr. Ramsey wrote in his tweet.

He embedded a tweet by Rep. Marsha Blackburn, R-Tenn., who also slammed the rule as “a one-size-fits-all regulation that means less access & higher costs for families seeking retirement advice.”

This Obama rule will kill the Middle Class and below ability to access personal advice. https://t.co/Eym2Jq5CUP

— Dave Ramsey (@DaveRamsey) February 22, 2016

Ms. Blackburn’s tweet linked to a blog post promoted by House Speaker Paul Ryan, R-Wisc., that touted legislation to stop the rule.

Up to 7 million IRAs wouldn’t qualify for advice under new standards proposed by the Obama administration. https://t.co/EMl5VfsBiv

— Paul Ryan (@SpeakerRyan) February 22, 2016

The DOL is expected to release the final rule in March or April and implement it before the end of the Obama administration.

Investment advisers who support the rule, which would require advisers to 401(k) and individual retirement accounts to act in the best interests of their clients, said Mr. Ramsey participated in the cascade of opposition because the advisers who work with Ramsey Solutions charge commissions.

Spoken like a guy who claims to be an advisor but earns money for sale of commissioned products. Because he does. https://t.co/Syq9nnzbRB

— MichaelKitces (@MichaelKitces) February 22, 2016

“He has a huge conflict of interest,” said Carolyn McClanahan, founder of Life Planning Partners. “If everyone was required to be a fiduciary, all the advisers on his platform would be hurt. Of course he’s going to be against it.”

Mr. Ramsey responded because his business model is under threat, said Ben Carlson, director of institutional asset management at Ritholtz Wealth Management.
“He’s in a position that he has to say something,” Mr. Carlson said.

"It is difficult to get a man to understand something when his salary depends upon his not understanding it." pic.twitter.com/k5NArFZNAy

— Ben Carlson (@awealthofcs) February 23, 2016

A spokeswoman for Mr. Ramsey said he was unavailable for comment. She did not respond to a request for comment about the assertion that Mr. Ramsey is trying to protect commissions.

In a newsletter, Mr. Ramsey said he prefers commissions to fees.
“I personally do not choose fee-based planning — paying 1%-2.5% annual fees for a brokerage account,” Mr. Ramsey wrote. “Many financial planners suggest fee-based accounts, but I still choose traditional A share mutual funds,” that charge up-front commissions.

The battle pits brokers, who would have to sign a complex contract with clients to continue to charge commissions on retirement accounts, against investment advisers, who charge a fee based on assets under management and avoid or disclose conflicts.

“It seems to me that it’s difficult, if not impossible, to find someone who is against the fiduciary standard who doesn’t have a financial interest in some fashion,” James Osborne, president of Bason Asset Management, wrote in an email. “So Dave Ramsey has his preferred ‘providers’ who are brokers who earn commissions and he gets paid through them.”

This is not the first time Mr. Ramsey has tangled with investment advisers on Twitter. Three years ago, fee-only advisers returned fire on Mr. Ramsey when he touted 12% investment returns and extolled the virtues of commissions.

Mr. Ramsey tends to block from his Twitter feed investment advisers who oppose him.

He shunned Ms. McClanahan after the 2013 dust up.

How much is FINRA paying you to say this @DaveRamsey
Financial advisors should always be a #fiduciary for clients pic.twitter.com/qkSVHKFmlZ

— Carolyn McClanahan (@CarolynMcC) February 23, 2016

“He has lots of good things he talks about,” Ms. McClanahan said. “All I want to have is a good conversation about areas where he’s not doing a good job.”

The premise upon which Mr. Ramsey, most Republicans and the financial industry base their DOL-rule opposition is flawed, according to Mr. Carlson. They say it would hurt small investors.

“That small person has never been paid attention to, as far as I’m concerned,” Mr. Carlson said. “That line of defense that the little guy is going to get steamrolled or screwed over doesn’t make sense to me. I don’t think that they’ve been put at the forefront in the past.”

Mr. Carlson said the investors with modest assets have more options today than ever before, including robo-advice, advice paid by the hour or advice given on a retainer basis.