A while ago, we talked about “reading the fine print” and why that may be important for any consumer to do. With all the discussion in the news about the proposed DOL fiduciary rule and its pros and cons, another aspect of that fine print has come to the fore. Rules and regulations are often created to protect certain groups and in the financial industry, other than protecting the jobs of the writers of such rules and regulations, the ostensible primary targets of the protections proposed are the consumers of the financial industry products and services – our clients.
Clients should understand that compliance with regulations comes at a cost to the regulated business and that the additional cost of doing business due to the regulations will be passed on to the customers of the regulated business. Just as an increase in office rent or utilities may be passed on through higher charges to the customers of a business, if the increase cost of compliance cannot be compensated for by cuts in other expenses, that increase in compliance costs will eventually trickle down to the customers of that regulated business.
That fact shows us that there is another good reason for consumers to read the fine print: you are paying for it. The regulation is intended to protect you by advising you of various facts and concepts regarding products and services and that is why it must be included in the various communications and agreements you receive and enter into with a regulated business. If you do not read that information, you will not necessarily be aware of the things you should be in making your decisions about working with that business.
But whether you read the fine print or not, you will have the cost of that compliance included in your charges for the services and products you buy. Doesn’t that encourage you to pay attention to what is being disclosed in the fine print? Of course, the final catch to all of this is that there is no guarantee that what is disclosed by a regulated business is in fact true and complete. That is what makes everything just perfect for the consumer.