Did you know that by law, someone can call themselves a financial advisor and not have to uphold a fiduciary standard? What's a fiduciary standard, you ask. It means that they put the clients' best interest ahead of their own best interest. Now, the fiduciary standard allows the advisor to be paid, but it means that this payment needs to be within a fiduciary level of care.
The latest financial reform legislation originally required that everyone who worked with your money as a financial advisor had to follow fiduciary standards; however, due to heavy industry pressure, this language was dropped, and the current legislation does not require it.
In today's investment news, a dozen industry leaders, including Nobel prize winners, and Vanguard founder John Bogle, are asking that the fiduciary language be put back into the bill.
The language needs to be there. Clients believe it to be true that their advisor is always acting in their best interest, so the laws need to be changed to make it true. If you feel like being an activist, contact your senator asking him or her to support that the Fiduciary Statement language be added to the bill.
Tomorrow, we will review the different names and titles that financial advisors can use and what they mean.
Be prosperous!
Peggy
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