I was extremely disappointed that the financial reform bill dropped the mandatory fiduciary standard. Many leading minds, including Vanguard founder Jack Bogle, wanted the bill to include language that required all financial advisors (individuals who help clients with their portfolios) to act as a fiduciary. This means that they must always act in the client’s best interest. Investment Advisors, like my firm, already must hold this standard; however, the brokerage industry does not. This means that a stock broker does not have to uphold a fiduciary standard. Instead, he or she must maintain a “suitability” standard, which means that the investment choices must be suitable, but don’t have to be the “best” choice in the mind of the broker. I find this fact both amazing and appalling. I had no idea when I entered the industry that there were two standards!
Now, some brokers choose to act as fiduciaries, but it isn’t a mandate. And acting as a fiduciary doesn’t mean that I am not compensated for my work. If I went out of business, I believe it would not be in the best interest of my clients! But my fiduciary standard means that I am always trying to take care of my clients, keeping their expenses lower without sacrificing quality, and helping them maximize returns in their level of risk. Further, I try to provide financial planning, that ensures all areas of their financial lives have attention. Our industry needs fiduciary reform.
Be Prosperous!
Peggy
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