OA50: Obama's Fiduciary Rule (With Guest Ben Offit)

Transcript

This transcript was generated automatically and may contain errors — the audio is the record.

0:01:17 Thomas: Hello, and welcome to Opening Arguments, this is episode 50, that's some sort of borderline meaningless milestone, but who cares, 50 episodes, how you doing, Andrew Torrez, well, not yet, we may, this episode may be the one that does it, like it just kills us and we didn't get quite fully through 50 episodes. We'll see.

0:01:28 Andrew: I'm great. I'm super excited that we've gotten through 50 episodes and we have to do, I think we have to do at least 186 more because we've got to get you through the bar exam. So, you know, 236, maybe we can think about wrapping this project up, but not before then. So me

0:01:45 Thomas: That's true., Retirement?, nah, never, never., there's always legal issues, that's why I love the show so much.

0:02:00 Andrew: Too.

0:02:00 Thomas: All right. Well, you know, I will say this is episode 50. I think we could reconfigure the opening quotes for episode 51 to 100. So if you have any suggestions for opening quotes that we should redo in the intro, might be fun. Email openarguments@gmail.com. Send us what quotes you think we should use. It's always got to have at least one Futurama one. So that's always a given. But if there's any other quotes that you like, that you think might be fitting for our intro, let us know.

0:02:35 Andrew: I will be lobbying heavily for the 95th amendment one from Futurama, that's one of my, uh, one of my favorites so, we'll, we'll see if it makes it in, so stay tuned for episode 51 in the future, yeah.

0:02:40 Thomas: Oh, man, I like it. Yeah, yeah, well, we'll see. Yeah, I'll consider the arguments. I'll consider the submitter who sent me that one. We'll all have to consider that person's merits, and I'll make a decision. Uh, exercising what little power I have on this podcast. No, just kidding. All right, let's get to our first segment of the day, breaking down the law.

0:03:07 Clip: The law breaking down

0:03:14 Andrew: Yeah, and this directly relates to the subject of our interview, which is related to the Obama Department of Labor's rule that was promulgated regarding the definition of the term fiduciary, and requiring investment advisors to act in a fiduciary capacity with that higher obligation. We discuss in the interview the fact that this proposed rule has survived four separate court challenges. And as we are recording this on March the 2nd, so in a week before this episode aired, the Department of Labor just promulgated a brand new rule, delaying the rule by 60 days, from April 10th, 2017, which is when it was initially established, to June 9th, 2017.

0:04:11 Andrew: Now, because this is in and of itself also a rule being promulgated by the Department of Labor, it is subject to a notice and comment period. But that's going to be a quick period. I doubt that there's going to be much that comes as a result of it. And so this is Trump's own Department of Labor has now taken a look at the conditions on the ground and said, yeah, we're going to put this rule into effect, notwithstanding some prior executive orders and the directive to reconsider this that came from the president. This is going into effect. But we're gonna delay by two months in order to give businesses the time to sort of cope with the changes in obligations. So this really couldn't be more timely. Financial advisors right now, I think, are gearing up for the implementation of this rule. And we're going to find out on this episode what that means in practice.

0:05:05 Thomas: Excellent. Well, with that little intro, I think that's a great way to segue into our interview.

0:05:15 Thomas: Joining us today is Ben Offit. How are you doing, Ben?

0:05:18 Ben: Doing great.

0:05:19 Thomas: Great. I'm really glad you're here. We're going to talk about this new fiduciary rule that I don't understand quite yet. So I'm glad you'RE here to explain it for us. But I think there's also a legal component that Andrew was going to tackle first. So, Andrew, how about it?

0:05:29 Ben: You're welcome.

0:05:36 Andrew: Yeah. Yeah. So our listeners may remember that a couple of weeks ago we talked about how the Obama Department of Labor promulgated new rules with respect to the Federal Fair Labor Standards Act with respect back to overtime hours, and this is a similar kind of rule, also promulgated and made final by the Obama Department of Labor, that changes what retirement advisors and financial planners can, the standard of care that they have to provide to their clients. So, uh, like the FLSA rules, it is in final form. It has been promulgated. Unlike the FLSA rules, uh, There were four separate legal challenges to try and block it, and they couldn't find any judge to block this rule, right? So Yeah. So It is

0:06:30 Thomas: Oh, Wow. Wow. So They weren't able to find Some Texas judge somewhere or some whatever, uh, Wow, it's that it's that straightforward, huh? Yeah.

0:06:33 Andrew: Nope. Nope.

0:06:37 Ben: I I, I can just butt in for a moment. I think actually one of the, um, cases was in Texas, and I think that that was, you know, denied. Yeah,

0:06:49 Thomas: Oh,

0:06:49 Normalandrew: To overrule it. So yeah, and the most recent one, uh, was February 17th, was a couple of days ago, in Kansas. Yeah. So again, you know, this is a, there's... there's forum shopping to what I think we could charitably describe as some deep red states. There was, there was sort of no legal grounds to to block the rule from going into effect. There is the, and Thomas, you covered this on SIO actually, there is the general memorandum that President Trump issued that is probably going to delay implementation by six months. That was just the sort of general executive order. But even then there's some question as to whether that's going to affect this rule.

0:07:34 Andrew: So what is the rule? And then we can kind of delve into it. As currently enacted, the rule is scheduled to begin to take effect on April 10th of 2017, so a month and a half from now, and will phase in affecting various financial advisors and will become fully effective by January 1 of next year, 2018. And what it does is it changes the standard of care that anyone who provides financial advice in connection with retirement plans or retirement planning, and it requires you to abide by a standard that's called a fiduciary obligation.

0:08:22 Andrew: And our guest is going to kind of fully explain what that means. But what I want to say from a legal standpoint is this is the highest obligation individuals working together have under the law. When you are on the board of directors of a corporation, for example, you have a fiduciary duty to each other, to the corporation, and to the best interest of the stockholders. So it creates the highest standard of care. And what What it means is that the flip side of that, the higher the standard of care, the more clear cut it becomes if someone sues you for failing to abide by that standard of care. If you have a passing duty to somebody, think about this in terms of an investment. Like if I steer you wrong and I have been, the factual inquiry is going to turn on how much work did I do in preparing that investment, that advice for you.

0:09:22 Andrew: And the higher the standard of care, the easier it is to prove when there's wrongdoing in that case. So that's kind of how this has lined up politically from my understanding. Sort of on one side are the consumer advocates who say if you're providing financial advice to somebody about their retirement, you ought to be able to hold them accountable to the highest possible standard. On the other side is sort of the, this is more regulations and red tape, and it's going to be more costly, and it is going to cause more lawsuits. So, you know, typical kind of breakdown. The reason I wanted to bring Ben on is because Ben is a financial advisor, and I think he can kind of tell us first sort of from a practical perspective, what's this change in this rule going to do?

0:10:09 Normalandrew: And also, you know, as we were talking about this, his opinion sort of ran a little, I would say, didn't fall neatly into that political divide. And so I thought that the combination of both of that would be really, really interesting to go forward and do a show. What did I get wrong? Let's start with that. I don't think you've got anything wrong. I really

0:10:29 Thomas: Come on.

0:10:30 Ben: Don't. It sounds like you really did your research.

0:10:34 Thomas: So I'm still the only one who gets things wrong on this show, huh? So we gotta, yeah.

0:10:38 Andrew: Well, now we know. Okay, thank you. Thanks for being on the show, Ben. I appreciate it. It's been great.

0:10:39 Thomas: Yeah. That's All that's How we Need It, so Let's so Ben, if you don't mind, Ryan, why don't you explain maybe in more detail, like maybe more, I guess, personal detail, like what this would mean as a financial advisor.

0:10:43 Ben: You're welcome.

0:10:43 Normalandrew: I'm going out on a high note.

0:10:47 Andrew: So why don't

0:10:56 Normalandrew: We start with what's the current level of obligation? What does that mean? And what problem does this solve by increasing the level of obligations? Yeah, I mean, I think that tangibly, it's just what you said. It's trying to make advisors very clearly and very distinctly have their clients' best interests first, and only their clients' best interests first, and not their own interests first. So I think that certainly sounds like it would make sense. It certainly sounds like that should be the norm. But I think the reality is there's so many financial products out there. There's so, so many ways to go about serving your clients. And there's different compensation structures, there's difference, you know, suitability levels that it can become not so clear.

0:11:47 Normalandrew: So I think the attempt of this rule is to try and streamline things and make things very clear for the general public, and a certain way that financial advisors uniformly have to act. So the public ultimately gets served with their best interests. Okay. So let me do this on a practical level. I come into your office right now and I say, Ben, I want you to help me with planning for retirement. What legal obligation do you have to me right now? As of this very moment? As of today, before this rule goes into effect. That's the confusing thing about it is that technically I have a fiduciary standard to you, but I also have a suitability standard to you. So there's multiple hats that I can wear. And that's also what's not clear to the public.

0:12:32 Ben: So I, I have my own company, I've got my own firm, it's called Clear Path Advisory. But you know, we operate through a broker dealer. So when we operate through our broker dealer that provides compliance and provides oversight, and allows us to buy and sell securities, there's different ways that we can go about that. So one way that I can go About that is, you know, let's say I'm managing, you know, a $300,000 investment account, and we roll that over. One way I could roll that over is with a fiduciary standard. And what that means is that I'm charging a level fee for that management. So maybe that's like a 1% fee per year. That's a a fiduciary standard. It's levelized comp. It is not a ton of upfront money.

0:13:18 Ben: The other way to go about it is with a suitability standard of care where there is a commission tied to that rollover. Maybe that is a 4% rollover. Maybe that's a 5% rollover. If that is $300,000, you can do the math, but that might be, you know, 10, 12, 13, 14, $15,000 upfront that I get. So technically, you know right now I could do either one. Um, right

0:13:46 Thomas: So it's more up to you than it is to the customer?

0:13:50 Ben: Now it's totally, well with, with the choice of acting with a fiduciary level of care or a suitability centered of care, uh, technically both routes are permissible.

0:14:03 Thomas: Huh. Practically speaking, who ends up making this decision? Is this the kind of thing where a customer of yours could ask you about it, but they're essentially not going to because I wouldn't have known what the hell this is if I was coming into your office? Is this the kind of thing that you just do based on whether your sort of evaluation of like, do I want to take on this higher standard of care? Is it worth whatever the extra money or vice versa would be?

0:14:03 Ben: Yeah. Yeah.

0:14:27 Ben: Well Ultimately, it's the client's decision. I mean, it's their money, you know, it's they're in hard-earned dollars that they've put away, but ultimately, you know, they're utilizing an advisor, you know, for advice, so you know, they can be

0:14:43 Thomas: So at some point in the agreement, you would explain to them like, here's the two routes we can go. And which do you want?

0:14:44 Ben: Uh, Yeah, I can do that, or I can say, you know, I feel like this is the best way to go for you. But I think ultimately, you know, my relationship with my clients is, you know, similar to a doctor relationship. So if you go to your doctor for a checkup for a physical, and the doctor, you know, takes your heartbeat, they check your ears out, you know, whatever they do, and they say, okay, I think that you need to take this prescription to solve this, you know, ultimately, you don't have to take that prescription. But you might say, well, you, you know, this is my doctor, so I'll take his advice. So I think what's happening in the industry is that, you know, there's many consumers out there. There are so many people who are working in some capacity with a financial professional, and they don't know, you know, what's right or wrong or different.

0:15:39 Normalandrew: And, you know, they might just take whatever advice their advisor gives them, which might not always be the best solution for them. And that's, that's the impetus of this rule. That's where it's coming from is, you Can we create a way where there's no incentive from the advisor's standpoint to get paid more or less with different recommendations? And thus, they're only looking out for the client's best interest because there's not incentive for them to do any differently. Let me make sure I understand this and then try to ask another question. Sure. Under the current suitability standard, there's less that you have to disclose. Is that right? Yes. Okay. And can you give me some ideas of what specifically that might be?

0:16:31 Normalandrew: We're hitting an area in which I would be a self-described amateur here. So that would be helpful. I don't know if it's less you have to disclose as it's more maybe with the fiduciary rule. They just want to make everything extremely transparent. So I guess what that means is, you know, they want the client to really, really understand, you what fees they're paying year or what the underlying fees are of the funds. They want the client to really understand if there's any conflicts of interest that are inherent in some sort of retirement recommendation.

0:17:11 Normalandrew: So I don't know if that clarifies it more, but it's not that things aren't being disclosed now. Now it's just that the fiduciary standard wants to take it to an even higher level, a higher bar. Okay.

0:17:25 Thomas: Do you know of some like catalyst that led to this? Was there any sort of specific scandal or specific event that that led to the Obama administration wanting to make this happen? Mm

0:17:30 Ben: Yeah. You know, I, it's a good question. I don't think that it was one specific instance or one specific case, you know, that was really the thing that drove this. I think there was a number of things, you know over time that have happened, but I you're in California, right Thomas? Okay. Well, you know, Andrew and I are here in Maryland, but I'm sure this exists in California, but there's so many, quote unquote, retirement experts or retirement specialists that really aren't financial advisors. They put themselves out to be financial advisors, the average consumer would think they're a financial advisor from the way they promote themselves, the way their commercials go and their websites, et cetera.

No, what they really are is potentially annuity salesmen, so you know they're putting people into financial products that, you know, these these consumers might not even realize it's an annuity because they're kind of dancing around the idea that it's an annuity. They're saying, you know, it's got an eight percent upfront bonus, it's got a seven percent guarantee per year. And you know these people on the radio are saying, wow, you know, I want that, that sounds, sounds awesome.

0:17:53 Thomas: Hmm.

0:18:47 Ben: So why don't I go get into that? But then they might work with this quote unquote financial professional who puts them into this product, which they might not ever even truly explain as an annuity. And then if they invest their $150,000 with them, which might be their life savings, then maybe there's a 10% upfront commission to that advisor. And then maybe they have buyer's remorse six months later or a year later, once they understand more what they got into, and then they can't really get out of it. And that's the problem. So, you know, stuff like that has happened all across the country. And I think, you know, complaints to FINRA, which is the Financial Industry Regulatory Authority, complaints to the SEC, which has the Securities and Exchange Commission, you know, and stuff like that.

0:19:34 Ben: And, you know, now the Department of Labor getting involved, you these issues have come to the surface. And they, you You know, I think Obama said, okay, we've got some sort of issue here, you know, with the financial services industry where something can be cleaned up and be, you know, be made better for our consumers out there. In. So what the fiduciary rule is trying to do is say, it's trying to really get rid of commissions in the first place to say, all right, you're being charged 1% per year, whether that's an annuity or whether that's an investment account or whatever it is. So it's the same fee anywhere you go. And therefore that creates more flexibility and more or freedom for the consumer, and also decentivizes the advisor from trying to put them in something that is really not in their best interest, because ultimately it doesn't matter to the advisor anymore if they're getting paid the same across all products.

0:20:30 Thomas: Well, that sounds pretty good to me. I'm wondering if we can get your opinion on that. I mean, is this a rule that people in your position are resisting or are not wanting to embrace?

0:20:42 Ben: So that's Question, question. I would say that, um, far and away, uh, this topic, this regulation has been the number one thing that everybody's talking about in my industry on a day in and day out basis. Um, ever since it was introduced. So everybody's talked about it. Everybody's thinking about it I think that, you when it was initially by Obama, I think that everybody, you you know, said, okay, that sounds good. You know, that sounds like a very positive thing. But then I think, as they actually started to roll out the definitive implications of how it would work, and how that, you know might actually be instituted. I think that's when people started to, you know, have some questions or have some, you know, resistance against how they're going about implementing and implementing it.

0:21:31 Ben: I think some of those things might be, for example, take myself, for example. I have clients that are in commission-based investment accounts, and I didn't do anything wrong. I swear to I didn't do anything wrong. I did what I was told to do, right? So my broker dealer actually, you know, where I used to be, they, you Know, are my compliance arm, they are looking out to make sure that I'm doing the right things for my clients. And they would say, Okay, you know, Ben, this is a $20,000 account. You have to put that into a commission based account, not a fee based account. And the reason that you have to is that that fee will actually turn out to be less over time than a fee-based account. So I think what's going on is some advisors are saying, well, wait a minute, you're changing the rules on us.

0:22:21 Ben: That's not fair because you told us to do it one way for 25 years. And now you're telling us to do it another way. And now we have to go back to all of our clients, and we might have hundreds upon hundreds of clients that we have communicate this to. And it's really not fair to us that we we have to go, you know, almost like apologize for something we didn't do anything wrong with. This is the way it's been done for 25 years, and that's the way that regulators told us to do it. And now you're making us look like the bad guy, and we have to do all this work to go make up for that. And so I'm not saying that I'm opposed to the rule, but I'm saying that I can understand some of the resistance because of that.

0:23:07 Ben: You know, simultaneously, um, there's a lot of lawsuits with proprietary products, right? So, know, let's say that I work at a big, know, financial institution, and let's say I work for, you know, Fidelity. For example, Fidelity is a behemoth in the industry. Um, they provide custodianship, they, they provide financial advice, they also provide funds that they manufacture. Well, some of the tenants of the fiduciary rule are saying you can't have proprietary products because that's a conflict of interest. So let's say that I'm a Fidelity advisor. Let's say I work for Fidelity, and then I want to go utilize some Fidelity funds in my client's portfolio because I think that they're good funds. Well, the fiduciary rule is going to say, well, you can't do that because that, that's a conflict of interest because you represent Fidelity and you're using Fidelity funds.

0:23:59 Normalandrew: So some people have had resistance to that because they're saying, well, what if I really believe in Fidelity? What if I believe their funds are actually really good for my clients? And now you're telling me I can't use them because I actually, I worked for that institution. So that's been some resistance. To go back to the annuity example.

0:24:17 Normalandrew: Let's say I go into a less scrupulous financial advisor, and that person is talking to me about adding an annuity to my retirement portfolio. Yes, how much does he have to disclose to me, uh, before, under the current standard, to take my money and put it in? Right, does he, has to tell me everything? Is it buried in the fine print? Does he have to tell you about, like, what do I, as a consumer, what do I wind up knowing about this? Yeah, that's a great question. I mean, ultimately, at the end of the day, you know, they should be disclosing that, you know, all the facets of the product and everything about how it works. But But I think what can happen is that some of these products, like an annuity, can be extremely complex.

0:25:04 Normalandrew: And they're very hard to really understand how they work. And it's actually hard for the advisor to communicate themselves. So what they might do is paint a picture of the highlights of how it works and the benefits of how, how it works, and then they don't exactly get into, you all of the, you like you said, you know, fine details.

Um, you know, and then there might be a situation that changes with the client where, you one of those fine details are triggered, and then they were unaware of, oh, that's actually how the product works. And then they have a rude awakening, and they're very upset, you know, and that's where, um, know, they might complain to SEC or FINRA or something like that. Yeah, and let's I mean, let's spin that out. So suppose I go in, I talk to you, uh, I talk to this other person. Yeah. And, um, they say, okay, uh, you want to take your hundred thousand dollars, you want, because this is going to give you fixed payments in your retirement at a certain percent, and it's great. And they don't tell me that it has that 10% fee, right? So immediately, so I got, I got the harm immediately, right?

Like my a hundred thousand all of a sudden becomes 90,000. Right. Know, so yeah, like, why am I going to take, I'm not going to, I's not going to put that into an annuity, get a couple of months, and then say, okay, time to bail, because now I'd be bailing with 90, 000. And then that would be a terrible use of that money. I, yeah, say, okay, I do it, I get in the annuity,

0:26:36 Normalandrew: I go back in, and I say, alright, now I do want to change out, and you say, okay, well, I'll cash you out, you've got $90,000. And I said, hey, wait a minute, you never told me, that you never disclosed to me that there was this 10%. Is that the basis, are there, under the current suitability rule, if I sue you to get my money back, am I going to win, am I gonna lose, is it gonna be a tough call, like, where's, where's the line now? So I'm just trying to get a sense of what the harm is in order to know whether the change to the rule is necessary. Think that the change to the role will really help in this arena in making sure that consumers are aware of the difference between a fiduciary standard and a suitability standard.

0:27:21 Ben: But I with the suitability standard, I just think technically you only have to be at the point of sale opposed to an ongoing basis with the fiduciary standard. Let's say that annuity product made sense for whatever reason at at that moment, well maybe it did. But Um, then maybe it doesn't make sense for the client, you know, a year later. And then technically the advisor is not held accountable because. It only had to be suitable at the time of the transaction. And that's, that's the difference between, you suitability standard really is akin to is a product-based world, Versus the fiduciary standard is a planning-based word. And like maybe a small thing, but it's actually a really big difference.

0:28:15 Thomas: Why isn't there room for both? Is that something that can't happen? Like, why can't there be the standard for what you have to, you know, disclose is such that you're more of an advisor, but you still have the option to sell products to your clients if it's in their bank. Yeah.

0:28:31 Ben: What

0:28:31 Normalandrew: Some of the detractors from the fiduciary rule, are upset about is they're saying, why can't it be both? Does it have to be all one way? But I think the hard reality about that is that it's, it's hard to have both, I guess, um, because the lines get blurred, and, know, I could be acting on one hand, uh, with my fiduciary hat on, and then the next minute, you know, typically if I'm talking about, know, a product, I'm acting with just my suitability standard hat on. And so how's the client supposed to really decipher the difference between that? I want to get back to other point you made with respect to the annuities, that there are individuals who are essentially salespeople for annuties, but that they're holding themselves out as financial advisors.

0:29:22 Normalandrew: How common is that? Very common. When you say very common, so what do I look for? I'm a consumer. I'm going out and I'm trying to find somebody as a financial advisor. How do I know if I'm being scammed by that or not? Is the problem with the industry, and I think that is The Basis for this whole rule, which has good intentions. So I think the problem with the financial services industry is that it's such a wide net. There's so many people that technically can call themselves financial advisors. And there's not a real distinction between a salesperson and a real advisor, so how's the consumer really supposed to know. That's a big problem in the industry. So technically, some places, some firms, I could just have a life insurance license That's it. I call myself a financial advisor. That really doesn't make you a financial advisor because you've got your life insurance license versus somebody, let's say, that has their certified financial planner Then they've got multiple investment licenses. Let's say they only operate at a fiduciary standard.

I don't know how many professionals there are in my industry, but I mean, you know, there's, there're so many people out there that, that can call themselves a financial advisor. And there's so many different ways to go about that, that there's not a real streamlined approach to it. So that creates a lot of confusion. So what do I look for? Like I Right? Can tell people, uh, in terms of when they're looking around, you Know, lawyers are the same way, right?

0:30:55 Andrew: Like there are people who are close to the line, people who were unscrupulous people who, uh you know I, I would recommend with confidence And I can give people – I can say like, hey, look, here are some things that you want to look for that will help give you some guidance so that you don't wind

0:31:09 Thomas: Like a belt. But

0:31:11 Normalandrew: Up – Yeah, yeah, yeah. I think the number one thing is, in my opinion, the CFP letters next to their name. So that stands for Certified Financial Planner. I think that is a great thing going on in the industry where it's saying, okay, this person is a certified financial planner. That means they have the highest level of background checks. They have the experience to be qualified as a certified financial planner. And they've passed rigorous educational requirements be called a certified financial planner, so it's very hard to become a certified financial planner and that's the closest thing in our industry to being something like a lawyer and having a JD next to your name or being a doctor and having an MD next to your name or being a CPA and having a CPA next to your name, you know, that's like, okay, this person has a stamp on them. That means they know what they're doing. They're good. Okay. They're certified. That's the number one thing that I would say. Okay. In addition to the CFP, I think that's number one.

But I think number two, overall, think consumers I should look to work with somebody who's operating on a fee basis. I think overall, people are going to get better advice from a fee-based advisor as opposed to a commission-based advisor. I think what consumers can do is they can ask their advisor, well, how do you get paid?

0:32:46 Ben: Because a lot of people don't even think about that. They don't know how their advisor gets paid. So ask them how do they get paid, um, and I think if their advisor were to come back and say, well, I operate on a fee basis, what does that mean? That means, you know, I charge you a fee for advice, uh, you pay me to be your advisor. I think that's a good thing because I think that that says, well, you're actually paying me, uh, to give you advice, right, and therefore I'm, I'm not going to be inherently in a position where I need to sell you something to validate my time. Because ultimately, if the advisor is not getting paid a fee, well, then how are they getting paid? Ultimately, they're going to have to be in a position make some sort of sale, make some sort of financial transaction, or else they're doing that work pro bono.

0:33:34 Ben: So does think, you know, number one, for a CFP. Number two, work for a fee-based advisor. You know, the way that I'm personally, you Know, doing that for my clients is I'm instituting like a monthly fee, similar to like a gym membership, where it's like, if a client wants to be a client of mine, and they want an ongoing advisor, you Now, that's going to look out for them on the long-term, me a fee, but pay me a monthly fee. That way, if you don't like me or you don't value it or it's not worthwhile for you, then you can stop at any time. That way I' m getting paid to be your advisor on an ongoing basis, to serve you on an on-going basis. I think that's important. The last thing that I' ll say that I think consumers should look for, in my belief, I' M biased because I'm an independent advisor, but I believe, you know, consumers should look for an independent advisor.

0:34:24 Ben: I think that also helps to eliminate inherent conflicts of interest. So if I'm independent, that means I represent the client and that's all I represent. I don't represent a product manufacturer. I don't represent a bank that has proprietary products. You know, I represent you only. And then I represent you to the marketplace. So we go pick and choose, choose, you know, what products or what solutions or what firms we want to hire, and then we can get rid of them at any time, I've got no conflict of interest, you know, with a certain, you know, institution that we would use. So the three things I would say, uh, look for a CFP, uh, look for a fee-based advisor, and number three, look for an independent advisor that's not, you know, married to or tied to one company that they're gonna have bias, uh, over, uh, for the consumer, would say.

0:35:10 Normalandrew: Okay. I want to ask, I want to ask one question before you move on. Is there like an internal, so for example, like for lawyers, we have an internal code of ethics and it can be disbarred and there's a governing body that, you know, if I, if I'm failing to comply with those standards, uh, they can strip me, uh, of my title. Yeah. Is that, and there's that same level with a CFP? Oh yeah, absolutely. Okay. And, and they would prevent, so if you see that, you know that it's not one of these outfits that is selling you an annuity or selling you a product in the guise of giving you advice. Um, I would say somebody that has a CFP, you know, can sell an annuity, right, but there's somebody that is not just, you know, out

0:35:55 Ben: There to screw people, that's somebody, you know, who's invested way too much time and is way too smart, you to be doing this for the wrong reasons. Like, like that, the type of person that gets CFP is not the type of person that's going to, you know, burn and churn people, um,

0:36:11 Thomas: Does this rule interact with that certification at all or are they totally independent?

0:36:15 Ben: Kind of, because when you are a CFP, you're held to a fiduciary standard.

0:36:20 Thomas: Okay.

0:36:21 Normalandrew: So this would essentially make everybody into that category. If, if this world goes through, it would, it, good. Well, that's, that's all. Anyway, I was in. Let me make a caveat to that, though. So, okay, even if the rule goes through, um, there still are exceptions to the rule. So, uh, there's going to be something called a best interest contract exemption, exemption. So what that means is anytime that there might be a form of a conflict of interest or there was a basis for using a commissionable-based product or an account, advisor could use a best interest contract exemption, which discloses to the client that I'm acting in your best interest and we're being exempt from the fiduciary rule. So even though that will become become the norm if the fiduciary rule goes through, there are still ways you to get around it or to use, you know, products like we're doing right now. So that sounds like that achieves kind of Thomas's question from a couple minutes ago of having both worlds, right? Yeah.

0:37:19 Thomas: Yeah.

0:37:20 Ben: Yeah, yeah, yeah, that's a good, good way to put a bow on it, yeah.

0:37:22 Thomas: We fixed it. Okay, good. Good. Yeah.

0:37:24 Andrew: So

0:37:23 Normalandrew: Yeah. Mean, what, I guess I I would ask that as kind of a wrapping it up, like, is that where you come down in terms of, uh, think this rule is going to be a good thing, even though it's going to shake up your industry, or, you give us a bottom line. My bottom line, you know, my opinion is I think it's a great thing. I think that, uh, you know, I think this role is going weed out a lot of the bad apples in the industry, because it's gonna force them to be held to a a higher standard, it's going to make them not able, you know, to do some of the predatory, uh, you know, type of acts that they may have been doing, um,

0:37:56 Thomas: Are we going to need to like disguise your voice now that you've come out in favor of the rule? Is your community going to be good? Anonymous person says the rule is a good idea.

0:37:57 Ben: Uh, No, no, I'm No. I mean everyone's entitled to their own opinion and you know I'm entitled to mine And That's

0:38:10 Thomas: I just, I'm just kidding. But like, does that, how do you think you're in a minority in terms of your industry and people who are in favor Of this rule?

0:38:19 Ben: A great question. If I had to take a gut level on that, I would say it's probably split evenly, uh, probably Maybe 50, 50, similar to Democrats and Republicans.

0:38:25 Thomas: Hmm. Oh, okay. So It's kind of of a partisan line, party line rule.

0:38:29 Ben: Yeah, yeah. I mean there's, there's a ton of advisors that work for, you product manufacturers that work for wire houses where, you know, this rule could really affect them and could really change the way, you know, that they go about doing their business. So they might not be as in favor of it. So, you know, let's say that, you I'm an advisor that represents XYZ company, or I'm an advisor that represents XYZ bank slash wire house. And they've got proprietary products that you get compensated on implementing for clients. If all of a sudden I have to disclose every time I I recommend a product for my company that I represent, that there's a conflict of interest, you know, that could make my sales go down, you know?

0:39:20 Normalandrew: And that could, you Know, change the way I do business. You know, so certainly, you Now, depending on where you are in your business and where you're serving your clients out of, it has big ramifications. Well, how do you evaluate, then, the arguments to the contrary, right? Folks who have a self-interested reason, like the one you just described, I work for a bank or a wire house or an insurance company. And really what I want to do is sell my own products. I'm going to stick by the suitability. I'm not a crook. I'm not a fraud. But I have a soft interest.

I make a commission every time I put you into a product that my company sells. Exactly, exactly. Uh, so, uh, okay. Can understand from a consumer perspective, right? I would certainly want to know that as a consumer, um, that, that seems to be sort of the genesis of that. But now that person is going to advance the arguments that, that we see sort of on the other side, the, um, you know, this is going to increase litigation costs. This is going to make it harder for you as an individual to procure a financial advisor, all of that. How do you weigh those arguments?

Are any of them any good or are they all pretext, I guess, is my question. Why Or there's resistance. Yeah, I mean just I can See other people's perspective even if I might not agree with them, right? Right. So let's say I'm a Democrat and I, you know, I have a Republican friend, even though I might not be a Republican, I can understand some of their views. Sure. I don't mean that there is that, you Know, we're going to close off our, close off your ears and not listen, but, but I

0:40:55 Thomas: But it's a, is it a question of some, uh, people are going to lose out a little bit, like some people aren't going to be inconvenienced, they are going, but, but overall, you think the greater good will be enacting this rule?

0:41:09 Ben: Yes, I do think the greater good will be enacted with this rule. I think it has the right intentions.

0:41:16 Ben: I, advancing the industry overall, it's forcing advisors to step up their game and be more transparent and be smarter and do things the right way, and you know, I think it's a good thing to not get paid more, you know, depending on what you recommend, but yeah, I mean, you know, I think there are some legitimate arguments against it. You know, some advisors that are against it have said, well, you know, this is going to, um, price out, so to speak, a lot of, you know, middle class Americans and lower class Americans from getting advice. Let's say, for example, a single parent household and I'm living on just above minimum wage and I've got three kids. I don't have much money to pay a financial advisor a fee to give me advice.

0:42:03 Ben: Or I don't have a lot of investable assets for them to manage for a fee, so the only way I get access, you know, to some sort of financial person in the first place, you is by buying some product, even if it's not the ideal thing. Let's say I go buy, you know, some sort mutual fund from someone, XYZ mutual fund company, I'm getting some something, um, even if it's on a commission basis. So a lot of detractors have said, well, well, you know, this rule is going to, you know, make a lot of the lower and middle class people not have the same access to advice that they had before. You know, and some other people are saying, you know, there are merits to some of these commission-based products that you're ignoring. That, you know, not just because they produce a commission doesn't make them bad.

0:42:49 Normalandrew: You know, maybe they have some really good attributes to actually serve people really well. So just to blindly say that every product needs to not have a commission or have a fee basis, you might not serve the general public. So, um, I think overall, you know, like you said, you know, I think this is something that is a good thing. But, you know, I, I think just some of the nuances need to continue to be discussed and hammered out. What's the biggest harm that you see out there right now? You know, in the industry? I mean, you've talked about a couple of different, some as hypotheticals and some as actual examples. Like, like, where are people, you know, getting ripped off, losing their money? I think the biggest issue is not people ripped off. I honestly just think more people need good advice.

0:43:35 Ben: I think the biggest problem is, you know, people need access and people need, you know, a trusted advisor. I believe tremendously in what I do. The biggest problem is not, you know, paying, let's say, you know, one or two percent more over time in a fee. The biggest problem is people aren't saving enough. People aren't aware of how much they need to save. People aren't insured properly. You know, people don't know what to do with their money. So I that's a far bigger problem, you know, than a debate over, you know, how to charge a client.

0:44:07 Thomas: Right, so Ben, thanks so much for taking us through all that. I'm, I'm somewhat persuasive by your opinion. It sounds like a good thing to me, especially as a consumer. I definitely get the concerns that people might have. But as a consumer, it sounds like it's a good rule to me. And I wonder if it'll end up going through. Maybe it won't now that given the new administration.

0:44:28 Ben: I had to put a gut level, you know, guess on it, I would say it will, just because we're so close to that date and that, you You know, like Andrew referenced, you earlier in the show, know, there's been several courts that have already opposed, you overturning it. So if I had to put a gut level I think it's going to go through.

0:44:36 Thomas: Sure.

0:44:46 Thomas: Cool. Well, yeah. Thanks for explaining all that. And we'll have to follow and see how it goes, see if it goes through. And what's the next critical date that we should look for in this process?

0:44:57 Normalandrew: Said earlier, April 10th. I think that's when it's supposed to go through, uh, and we'll see, you know, if it goes through as it was initially proposed or if there's some sort of delay or if there's some sort of material changes to uh to the act.

0:44:59 Thomas: Okay.

0:45:09 Thomas: All right. Thanks for joining us, Ben. Really appreciate it.

0:45:12 Ben: Welcome. Thanks for having me.

0:45:13 Thomas: Ben, tell the listeners where they can get a hold of you if they'd like to.

0:45:16 Normalandrew: Uh, yeah, they can go to our website, which is clearpathadvisory.com. Uh, they can call our office at 410-486-5242, or they can email me, Ben, at clearpathadvisory.com. Thank you very much for coming on the show. Thanks for having me, guys.

0:45:35 Clip: He who questions training, only trains himself at asking questions. What?

0:45:43 Thomas: All right. Thank you so much to Ben Offit for that interview. And we're on to the rest of the show. Let's talk about hashtag revote 2017. Well, Andrew, I'm guessing this is a totally legitimate thing that is an easy solution to the Trump presidency. So we're going to hear that great news, I guess. Go. Trump may no longer be president by the time we hear this, they hear this, because there's, it's such a great solution to the, to the election issue.

0:46:06 Andrew: Yeah, our patrons got an In which I believe I called Revote 2017 hot garbage. Um, I stand by that characterization. Let me, let me say briefly that this is a, uh, it's a pro se lawsuit, uh, lawsuit is the wrong word, it is a petition for a writ of mandamus, uh, that has been filed, uh, they have lost at every level, uh, it is, uh, under consideration by the Supreme Court. And there's a huge press release that touts the fact that this writ of mandamus is, quote, on the SCOTUS docket. I've got their website pulled up right now, and it's in like eight different colors and with exclamation points. And and in addition.

0:46:53 Thomas: That's How you know that's always a great sign, yeah.

0:46:58 Andrew: Yeah. And in addition, they say, and it has been fast tracked to a conference, which is going to hear and decide on whether to rule on the writ of mandamus by March 17th. Right. It's been, it's been expedited. And so, you know, associated with this is a GoFundMe page that has raised over twenty five thousand dollars. It's not quite, you know, the millions of dollars that that Jill Stein had raised. But nevertheless, there are people fundraising on the backs of this, issuing press releases and saying, come on, look like we've got this on the docket. And what is this? Right. Revote 2017 says there's evidence that the Russians hacked our election. And so therefore, we need a do-over and that therefore there's a do-over. We need to reconduct the entire 2017 elections.

0:47:45 Andrew: And so you would say, OK, well, seems kind of crazy. But their argument is, no, no. Look, like one, we're on the Supreme Court docket. And two, we've been fast tracked to a conference hearing. Like, doesn't that mean they're positively inclined? They're going to overturn this. Right. No. No, and, and nobody, it is, again, I am loathe to argue that something is a scam. I use that word with respect to Jill Stein because she either, yeah, yeah.

0:48:15 Thomas: I was gonna bring that up, that was a scam, you

0:48:18 Andrew: Look, she either knew or should have known. And it was clear from the disclaimers on the website that the fundraising efforts, the $7 million that were brought in ostensibly for recounts, very little of that was spent on the recounts, all of that. Most of the rest of that, it appears, went into the Green Party coffers. There was a disclaimer on the website that said, well, you know, if we don't, we're going to try and file recounts. But if we do not get them, we are going to use them for our voter protection efforts, which, you know, the Green party has such a long and storied history of caring about the integrity of the voting process. Here, I think we have something similar, a lawyer, which is to say you cannot, even though the plaintiffs themselves are pro se. So it's possible that, and by pro se, I mean, there's not a lawyer who would sign their name to this steaming hunk of garbage that is their petition for writ of mandamus.

0:49:07 Andrew: It doesn't, that's not always bad. Pro se means you're representing yourself. That's not always a bad thing. And in particular, in small claims court, I often tell people who want to hire me like, you know what, like, go go in yourself, give it, give it a whack. You got it, because, because small claims courts, you know, can be informal and it can be an advantage to represent yourself. The Supreme Court is not, is not generally a good time to represent yourself. Like it's, it's, I would advise you to have a lawyer in that, in that case. But, you know, so I don't, I don't mean to cast dispersions on folks who represent themselves. It's possible they don't understand. So let me tackle both of those claims and then we'll get into, like, what this thing is. Number one, it's on the Supreme Court docket, right, yes, because a docket means the Supreme Court must consider this thing. Right? And so to consider a thing and then deny it, you still have to, like, a docket is like a calendar. It's a schedule. Right, so being

0:49:19 Thomas: Got this, yeah So

0:50:06 Andrew: On the docket means we have to consider this, and when you file a petition for a writ of mandamus, they have to consider it. 95% of what they consider, they reject, even when it is well reasoned and represented by counsel, let alone scrawled on a napkin, in, uh, you know. So being on the docket means that it will be considered. Right? What does it mean that it was fast-tracked to the conference? Um, I, I saw this going around, I saw a fundraising letter attached to it. Um, what the Supreme Court did was they took a look at this petition for writ of mandamus, uh, and, uh, they then issued a statement that said to the government, which would oppose the writ, um, you don't have to file your opposition, we're going to send this right to conference. Okay. I will say this, uh, I, I cannot claim to have read every Supreme Court decision in our nation's history, a sizable fraction, obviously.

0:51:02 Andrew: I have never seen, I have ever heard of, I cannot imagine a situation in which the court would be inclined to grant a petition either for writ of certiorari or for writ of mandamus and would not want the other side to weigh in. Right. Like that would, of course, first, that would be monstrously prejudicial. The right. Only time you would say, you know what, government, like we got this. You don't have to worry about filing a response is when something is such obvious crackpottery, when it is so clear that there is, that you don't even want. And again, like, you know, I don't know that the Supreme Court are.

0:51:39 Thomas: They just don't want to waste the government's time is that, yeah

0:51:41 Andrew: No, seriously, that is 100 percent the reason. Right. And I've had this happen twice in my career where I have represented a defendant and the plaintiff has filed a motion. And before the deadline for filing my opposition, the court will rule or will otherwise say, you know, you don't have to file an opposition. And I've won both of those. Right. Like it is that is as strong a signal as you can possibly get from the court. Right. Because if they don't want to hear from you, that pretty much means they've already made up their mind in your favor. Courts are not in the habit of saying we're going to rule against you. And by the way, we don't Want to hear From You. So the fact that this was like this is being fast tracked for special consideration, like for certain definitions of the word special, I imagine that that might be the case.

0:52:31 Andrew: But like, it's just the petition. And we're going into a little bit on the merits. The petition is garbage. And the fact that is being fast tracked is the Supreme Court's recognition that it is garbage?

0:52:45 Thomas: Yeah, I guess we're stuck with Trump then until, until further notice

0:52:48 Andrew: Yeah, well I look You You know, this is, that's a continuing theme from the show, right, like it, the idea that I get that it is hard for you, those of us who are, who, you know, are on the left who wanted the election to go the other way, like, I, I get it's hard to believe that, you know, the outcome, but the, there's going to be a magic document that you can file that makes this go away is just, like, that is a fantasy that will not happen, get over it. Uh, the only thing that could happen is, you know, as we've talked and had in our, uh, occasional and hopefully recurring segment, um, there might be sufficient evidence to impeach Donald Trump. If that happens, you will have President Mike Pence. Right, so there is there is zero scenario under which, uh, you're going to make everything go away if something.

0:52:50 Thomas: Yeah Well Could, could there be, yeah, okay, first off, I was totally going to say right before you said that, I think next week we should do a Trump, let's get it on the docket, and hopefully it'll be the kind of thing on the docket where it's not Andrew just saying, this is ridiculous garbage and I'm not going to do it. Let's get on the serious docket to do the countdown, the presidential Trump impeachment countdown for next week, and maybe evaluate some of the recent Russia stuff with Jeff Sessions and all that. That would be good. So the thing I thought of today that I just want to throw in because it's on topic is I still think, despite how bad Trump is, all this garbage, I still am not sure Pence is better.

0:54:31 Thomas: I think Pence could be maybe just as bad, but I think that Trump is such an insult to democracy that there's no reason not to try to impeach him if we can. But I would ask you, if there were so many revelations about Russia and the Trump campaign working with Russia to win the election, let's say, like, let's say that becomes clear, Trump campaign worked with Russia. Once you impeach Trump, would you, and I guess we'll pretend that there's enough will in the Republican Congress there, maybe, maybe we picture 2018, maybe it's different. I don't know if there'll be enough seats up, but would you be able to then just restart those proceedings on Pence as well? Because he was in, in the campaign and that whole thing is tainted by this Russia hack.

0:55:21 Andrew: So assume that that's the case. Right. And I want to say as a, as a predicate, a lot of the things we have talked about with respect to President Trump relate to emoluments clause or corruption or, you know, other things that, as far as I can tell, are, uh, idiosyncratic to Trump and for which Pence, who has a, I, I, there's almost nothing that he's ever said publicly, uh, politically with which I agree, um, but we, we have to say, right, he appears to be a long-standing public servant of integrity. There was, there's absolutely, there's no evidence to suggest anything to the contrary. So, you know, if you're talking about, uh, you know, taxes and bribes and emoluments and corruption, um, there's nothing with respect to Pence on that. If you were talking about Russian interference in the election, providing the basis, suppose you wanted to impeach both, uh, Trump and Pence simultaneously, um, a, it would be harder. Um, I mean, to me, that would be a harder case, right?

Because you would have to to demonstrate, uh, that the high crimes and misdemeanors were equally perpetrated, uh, or at least that both of them met the threshold for having committed a high crime and misdomenor. Right. And, and I could very easily imagine Pence saying, um, I didn't know, you know, I wasn't a part of any of this.

0:55:45 Thomas: Yeah. Right.

0:56:45 Andrew: I didn't know. And I don't know how you would establish, you his cooperation. There's no longstanding history of involvement between Pence and the Russians, for example. But wave all that away. Suppose you could show that, right? The Presidential Succession Act applies. If you impeach Trump and Pence simultaneously, then the Speaker of the House becomes president, So you would follow the Presidential Succession Act, it would go, uh, Paul Ryan, Orrin Hatch, and then down the Cabinet. Like, it just isn't going to happen, um, and so you have to reach that, um, have to make that decision. And I, I am inclining sort of more your way, which is that, um, I think.

0:57:05 Thomas: Right?

0:57:22 Thomas: I think I'd rather have Paul Ryan. Than Pence as president, um, by. A little bit, uh, personally, so.

0:57:24 Andrew: Yeah. Yeah. I agree, I agree with. That Paul.

0:57:31 Thomas: I. I would.

0:57:31 Andrew: Ryan.

0:57:31 Thomas: Actually.

0:57:31 Andrew: Does not.

0:57:32 Thomas: Still.

0:57:32 Andrew: Appear.

0:57:32 Thomas: Find.

0:57:32 Andrew: To be a. Uh.

0:57:32 Thomas: It. Worthwhile to. Try to get Pence the hell.

0:57:34 Andrew: I. Agree.

0:57:34 Thomas: Out of there as fast as possible, but.

0:57:36 Andrew: But, you know, look, we need to, I mean, it.

0:57:38 Thomas: It's not, not going to fix everything. That's the point. It's not going to fix.

0:57:39 Andrew: Right. There. Is no.

0:57:40 Thomas: Yeah.

0:57:41 Andrew: There's nothing, so.

0:57:42 Thomas: But the other benefit to doing any of this is it would be such a fiasco that it would make 2020, I would think, much more attainable for Democrats to say, you know, this presidency has been riddled with scandals. You know, you've got someone who wasn't even elected, you know, go down the line. I think that would be another reason to do it, but it won't be an instant fix.

0:57:42 Andrew: Yeah. Yeah. Right. And I would say, right, that is sort of the analogy to 1976 when, uh, peanut farmer Jimmy Carter. Uh, rose.

0:58:11 Thomas: Yeah. It would.

0:58:12 Andrew: To prominence, won the Democratic primaries, uh, because he was such an outsider, and then, and then won the election. Um, but yeah, like it, the one way in which it would be bad politically for the Democrats is if it was viewed as a power grab and not as safeguarding the integrity of the Republic. Right. Like if they orchestrated something to get, you know, right as they assumed power, and like, you wanted to impeach and they made, uh, you know, Hillary Clinton the, uh, honorary, um, because you can actually, uh, the House could, um, I believe the House can, that it's, it's constitutional, that there's no requirement that you be a sitting member of the House of Representatives to be made Speaker of the House. I think I'm correct. I think I'm correct on that. Uh, so yeah, like, right, like, like, so if, if the Democrats recaptured Congress and then made Hillary Clinton Speaker of the House and then impeached Trump, and, like, that would be terrible from, from if you were a Democrat.

0:59:08 Andrew: Right. Like it would it would be viewed as a coup. It would be reviewed as such overreach that I think, you know, that would mean that would have been a bad outcome.

0:59:16 Thomas: End up. Harming.

0:59:17 Andrew: Yeah.

0:59:17 Thomas: More than, uh, helping.

0:59:18 Andrew: Right. So merits of this petition, super quickly, this is a petition that argues for writ of mandamus to cancel the election because it violates Article Four, Section Four of the Constitution. Uh, the reason you have not heard me talk about Article Four, Section Four of the Constitution before is because there's no law on this that says, "The United States shall guarantee to every state in this union a republican form of government, and shall protect each of them against invasion, and on application of the legislature or of the executive against domestic violence." Right. So not at all a clause that says you get to revote stuff.

0:59:18 Thomas: Okay.

0:59:55 Thomas: Zero.

0:59:57 Andrew: And the petition was denied by the First Circuit. And I just want to read what the First Circuit said, because I can read the entirety of that decision in about 30 seconds. Um, by the way, pretty liberal circuit, too. Uh, the First Circuit said, "Mandamus is an extraordinary remedy reserved for those occasions when a petitioner demonstrates a clear entitlement to relief. Petitioner cites no precedent legitimately supporting her novel constitutional claim, and we see no basis for concluding that there is a clear entitlement to relief." The, and then I've omitted two citations, "but for this reason, the motion for stay is denied and the emergency petition for writ of mandamus is dismissed." So the First Circuit said this is neat and all, but you don't have a case that says you can do this. And, um, in.

1:00:42 Andrew: Light of that, how many cases do you think this petition for writ of mandamus cites? Yes. Zero, unlike our previous guest. Yeah, this cites no cases. Analytically, um, there's a table of authority with cases on it, but it doesn't actually match up to the text. Um, that there are no cases, there's one parenthetical without a citation that.

1:00:47 Thomas: Yep.

1:01:03 Andrew: Please.

1:01:03 Thomas: All. Right, well, unfortunately, I know Andrew's here to burst your bubble, it's hot garbage.

1:01:07 Andrew: "Please don't give money to these people." Yeah.

1:01:09 Thomas: Yeah, absolutely, good call. Well, with that said, uh, good transition, because here's a cause you should give money to, which is pay patreon.com/law.

1:01:19 Andrew: Thank.

1:01:20 Thomas: We've got to thank our top patrons of all time who I hope very much enjoyed their Law'd Awful Movies number four. And they are Roger Metcalf, Dan Irizarry, Eli Bosnick, Dave Nichols of Positively Doubtful Podcast, Steve Sigmund, Jim Grove, Desecrator, Patrick Fussell, Amanda Lipnack, La Bibliotecatrice, Heather Loveridge, Geeker41, Sean Pitti, Ian and Ali, Matthew Vernon, Violet Page Hall, Heath Enwright, Jeffrey Maynor, the Wayward Willis, and Matthew Maxson. Go ahead and take the rest. But thank you so much to those top, top patrons.

1:01:57 Andrew: You to Zina, to Dave Lovely, to Danny Baker, at Combat Nonsense, to the The Netsack Heathen, to Charone Frankel, to Squick Thinger, Ian Ryan, Matthew Hillier, Aaron Graddy, You Are Here, Aidan McCool, Brandon Smith, to John Bodley Esquire, Hunter Ash, Kylie Reiser, Jeff S., Sakashite Fukasumi, Philip Stromberg, thank you to Michael Schaefer, Michaela, the Frontier Foundation at EFF.org, they're doing great work, the, the Inciting Incident Podcast, Marissa Alexa McCool and her fabulous snarky publishy stuff, Frederick Alstromer, Sammy, Donald J. Trump, super genius, Revan, Conrad Michaels, and Zabby. Thank you all so much.

1:02:42 Thomas: Absolutely. Top patrons. Hall of Famers.

1:02:46 Clip: Oh, no associate of this firm has ever failed the bar exam. No kidding.

1:02:52 Thomas: All right, Hall of Farmers and everybody else. Time for TTTBE 14. I am 7 of 13, correct?

1:03:01 Andrew: That is correct. This is a crucial question.

1:03:03 Thomas: Oh, yeah. This drops. If I get this one wrong, and we'll find out Tuesday, of course. But if I get this one wrong, I'm at 50, and that is just, I don't like that, I don't, let's, let me get this one right. I'm going to summon all my best, uh, knowledge from law school. I'm gonna, I'm make it happen. Let me have it. Question 14.

1:03:22 Andrew: Yeah, this is a torts question. So remember that. Remember back.

1:03:24 Thomas: Uh, okay. I quit. Maybe next week. Uh-huh.

1:03:27 Andrew: Remember back to your 1L torts class.

1:03:30 Thomas: Okay, going yeah, thinking in my mind to tort. Yeah.

1:03:31 Andrew: OK, OK. A man with a long history of criminal violence who is a psychopathic personality often people by physical torture that is heinous and shocking. He decides to torture the victim's father for no good reason. After the beating, the father is hospitalized and in intensive care. The victim was not present, but read about it in the newspaper and heard about it from the authorities. The victim suffered extreme emotional distress and required medical treatment. Can the victim bring a successful action against the perpetrator for the tort of intentional infliction of emotional distress? Okay, so so our answers are A, no, because the victim wasn't present at the time that the outrageous behavior occurred. B, yes, because the activity was outrageous and shocking. C, no because the perpetrator did not know that the father had immediate family members.

1:04:33 Andrew: Or D, yes, because in torture cases, there is strict liability imposed on the perpetrator.

1:04:39 Thomas: My inclination for this is it's gotta be a no answer. Because otherwise, I would have heard about constant continuing lawsuits. Like every crime, really, every violent crime would have a bunch of lawsuits from family members on emotional distress. And I just don't think that's how it works. Now, this is an extreme case. I don't know if there ends up being some special rule for extremely horrific cases, like it would be answer D, I suppose. But I'm going to go ahead and guess that that's not the case. And I think it was answer A that was simply no, because they weren't there. Is that right?

1:05:17 Andrew: Answer A is no, because the victim was not present at the time that the outrageous behavior occurred.

1:05:21 Thomas: Yeah, I'm hoping this is a no brainer. The other no answer doesn't make any sense to me because I don't think you'd have to know either way. I mean, I think it would be a safe assumption that someone has family or something. But so I'm gonna go, I'm gonna hope it's a no brainer, go with A because they were, we're not there. And I would say that it could be D if there's some, like happens to be some extreme provision that allows for, if it's an extremely horrific crime that anyone related to the victim can sue for emotional distress. I just don't think that's how the law usually works, but we'll see if I'm right or wrong.

1:06:01 Andrew: All right. And as always, if you want to play along with Thomas on Thomas Takes the Bar Exam for question 14, the way to play alone on Twitter is to quote and retweet our announcement with this episode in it and include in your retweet the answer and your reasons. You can attach an image. Sometimes we award those who get the question right and have a lengthy explanation. Sometimes we reward people who have a pithy explanation. Sometimes we rewarded people who get it wrong, but make us laugh. So play along, share this episode with your friends and give us your answer to Thomas Takes the Bar Exam.

1:06:41 Thomas: Right. Same goes for Facebook. You share, dot, dot, put the answer in the post. Of course, you have to be liking and following our page, facebook.com/openarg. So definitely do that. But with that said, we'll find out if I can recover a little bit from my recent misfortune on the bar exam.

1:07:00 Andrew: I can't wait.

1:07:01 Thomas: So that's it for our show today. I want to once again thank Ben Offit for coming on, sharing his knowledge with us. I want to thank Andrew for always being here to share his knowledge with us. And I want thank our fine, fine listeners and our even finer patrons over at patreon.com/law. So that being said, we will see you next week.

1:07:30 Clip: This has been Opening Arguments with Andrew and Thomas. If you love the show and want to support future episodes, please visit our Patreon page at patreon.com/law. If you can't support us financially, it'd be a big help if you could leave us a five star review on iTunes, Stitcher, or whatever podcast delivery vehicle you use. And be sure to tell all your friends about us. For questions, suggestions, and complaints, email us at openarguments@gmail.com. The show notes and links are on our website at www.openargs.com. Be sure to like our page on Facebook and follow us on Twitter at OpenArgs. Until next time. This podcast is a production of Opening Arguments Media, LLC. All rights reserved.