August 22, 2010
Over my 19 years as a fee-only fiduciary advisor, I have seen many client situations where clients were sold unsuitable products by prior advisors. Consumers are often clueless about the hidden conflicts of advisors who work under the suitability rule, as opposed to advisors who are full-time fiduciary advisors placing clients' interests first.
Establishing a universal fiduciary standard is terribly important and the SEC now has the opportunity to express its true commitment to consumer protection. There is no wiggle room with the fiduciary standard. A financial recommendation is either in a client's best interest, or it is not.
I sincerely hope that the SEC will establish the fiduciary standard as it is known today as the law of the land. The large financial institutions that do not embrace the fiduciary standard today are creative. They will be able to adapt to the fiduciary standard by cleaning up their act.
The 19th century U. S. Navy oceanographer Matthew Fontaine Maury rightly exhorted us that "where principle is involved, be deaf to expediency." Let's get it right the first time and institute the fiduciary standard (as it is being used today) as the new standard for ALL advisors.