The issue of who is and who isn’t a Fiduciary has been in the news a lot this year. The recently passed Dodd-Frank law requires the SEC to deliver a study about differences in the oversight of Registered Investment Advisors and Broker-Dealers to Congress in January. After that the SEC will be charged with developing rules that govern the standard of care due to individual investors.
I’ve shared my thoughts about the Fiduciary Standard frequently on Twitter, LinkedIn, and in this prior post.
When all is said and done, however, I think the issue is a simple one. Whether an investor engages the services of a Registered Investment Advisor (RIA), a representative of a Broker-Dealer, an insurance agent, or anyone holding themselves out as a provider of financial advice, individual investors should have the expectation that this person is acting in their best interests. Simplistic, yes. Common sense, I sure hope so.
Many brokers and insurance companies have argued that instituting this type of standard would be too costly and they might be unable to serve many smaller investors. Please, give me a break. Are these companies admitting that some of their representatives are selling products that are not in their client’s best interests?
Will we get a uniform standard of care for all financial advisors serving individual investors? I’m skeptical, but hopeful we will at least see a vast improvement over the current suitability standard that most financial sales types are now held to.
What do you think? Please feel free to add any comments or thoughts about this issue.
What should you do if you are looking for a financial advisor? My very biased suggestion is to check out the NAPFA Find an Advisor link http://findanadvisor.napfa.org/Home.aspx. All of my fellow NAPFA members and I adhere to a Fiduciary Oath and we pledge to put our clients first.