Should financial advisers make protecting your money their number one goal?
This is not a rhetorical question. The fiduciary standard is a legal standard to which certain people who we trust with important responsibilities are held. It means “a person or organization that owes to another the duties of good faith and trust. The highest legal duty of one party to another, it also involves being bound ethically to act in the other's best interests.”
Would you be surprised that the dollars you are saving from your paycheck every month may well be going to someone who is not a fiduciary? Do you know the difference between a “fiduciary” and a mere salesman, who seeks to peddle whatever is “suitable” to clients under the current standard?
There is a powerful tug of war between two forces – consumer advocates and regulators on the one side, and the financial industry and big business on the other. The government under the Obama administration wants to make sure that financial advisers are held to a fiduciary standard, meaning that they must make their clients' (meaning your) interests their number one concern. Surprised that this isn't already the case?
Read this excerpt from an industry news source:
This is not a rhetorical question. The fiduciary standard is a legal standard to which certain people who we trust with important responsibilities are held. It means “a person or organization that owes to another the duties of good faith and trust. The highest legal duty of one party to another, it also involves being bound ethically to act in the other's best interests.”
Would you be surprised that the dollars you are saving from your paycheck every month may well be going to someone who is not a fiduciary? Do you know the difference between a “fiduciary” and a mere salesman, who seeks to peddle whatever is “suitable” to clients under the current standard?
There is a powerful tug of war between two forces – consumer advocates and regulators on the one side, and the financial industry and big business on the other. The government under the Obama administration wants to make sure that financial advisers are held to a fiduciary standard, meaning that they must make their clients' (meaning your) interests their number one concern. Surprised that this isn't already the case?
Read this excerpt from an industry news source:
“The business interest group would like the [incoming Trump] administration to halt and then replace the regulation that requires advisers act in the best interests of clients in retirement accounts. […]
The regulation, which would require financial advisers to act in the best interests of their clients in retirement accounts, was finalized last spring and has an initial implementation deadline of April 10.
The U.S. Chamber of Commerce said Wednesday that that timeline is unrealistic for a rule it argues is too expensive and burdensome for advisers and needs to be overhauled.”
Well, you see, financial advisers often get paid kickbacks commissions on the products they sell. They also rake in fees for your buying their products – on top of these products' own fees.
So when you are faced with issues like whether a “$100,000.00 IDS Life Flexible Premium Adjustable Whole Life Insurance Policy” is a good idea, do you really want a salesman or a fiduciary explaining its nuances, and the many pages of single-spaced type and small print? Again, this is not a rhetorical question. Don't find out the hard way like the Richards family did.
Cynics might say that just because advisers are held to a higher standard, it will not change the fact that they will still face conflicts of interest and might look out to pad their own pockets at their clients' expense.
True, I say, but it will make these folks a whole easier to be held accountable by ordinary consumers who, for better or worse, trust the nice man in the suit who made a house call. Also, you know the fiduciary rule is a good idea when even the financial industry's real remaining excuse is that the rule is “too expensive and burdensome” to comply with (Translation: Financial advisers will make less money off of their clients' hard earned savings). Now that's an expense and burden Americans can live with.
So when you are faced with issues like whether a “$100,000.00 IDS Life Flexible Premium Adjustable Whole Life Insurance Policy” is a good idea, do you really want a salesman or a fiduciary explaining its nuances, and the many pages of single-spaced type and small print? Again, this is not a rhetorical question. Don't find out the hard way like the Richards family did.
Cynics might say that just because advisers are held to a higher standard, it will not change the fact that they will still face conflicts of interest and might look out to pad their own pockets at their clients' expense.
True, I say, but it will make these folks a whole easier to be held accountable by ordinary consumers who, for better or worse, trust the nice man in the suit who made a house call. Also, you know the fiduciary rule is a good idea when even the financial industry's real remaining excuse is that the rule is “too expensive and burdensome” to comply with (Translation: Financial advisers will make less money off of their clients' hard earned savings). Now that's an expense and burden Americans can live with.
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