Bob Veres has a great article in Financial Planning Magazine about the issues associated with being a fiduciary entitled, “Give Up the ‘Fiduciary’ Fight .” In Veres’ article he writes:
The beauty of these approaches is that they don’t require an expensive lobbying campaign that the professionals are destined to lose anyway. Instead of waiting for Congress and the SEC to do the right thing, professional advisors can separate themselves unilaterally from the brokers who desperately want to be viewed as advisors because it makes their sales job so much easier.
These distinctions might also lure the honest brokers, and people who want to get out of sales and provide advice, over to the professional side of the fence.
No doubt, after a lot of hard and diligent work, the brokerage world will find ways to muddy up these waters once again. I have no idea how they’ll do this, but we’d be fools to underestimate their tenacity and creativity when it comes to protecting their executive bonus pools. The war rages on.
Governmental power is too easily corrupted by money.
And given the opportunity, Congress will be swayed to put in official definitions and procedures which will favor FINRA and the commission-based world of financial services and squelch the competition they face by fee-only fiduciary adivsors. We should not put our hope in the very system which has helped muddy the waters and blur the distinction.
Our only hope is to make that distinction clear to consumers in the free-market of ideas using something like a fiduciary oath.
The average consumer may not understand how much commission-based agents and brokers are paid, and they may not understand how fee-only financial advisors earn their fee. That is the challenge.
Consumers want a fiduciary standard of care when they understand what it is.
And when they understand they are more apt to know the ten questions to ask a financial advisor.
NAPFA offers a quick and easy way to find a fee-only commission-free financial advisor in your area.
Or you are welcome to consider our services.
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