August 25, 2010
The fiduciary standard should be in place for anyone providing advice.
If the sale of a product is the source of income, that producer is a sales person and not subject to the same standard as a person providing advice and not subject to the fiduciary standard.
The sales person who wears two hats by providing advice under the planners hat and then receiving commission on the sale of a product resulting from that advice, should be allowed to promote or advertise themselves as a planner, ONLY IF they are held to the fiduciary standard.
It should be very clear, if you hold out yourself as providing advice, you operate under the fiduciary standard. Product litigation would be easier to enforce was a disclosure made at the time of sale stating that this transaction DID OR DID NOT take place under the fiduciary standard?
The producer can decide whether or not to make the fiduciary disclosure and in the absence of this disclosure cannot hold themselves out as providing advice. The major brokerage companies can make the decision, advertising that they are providing advice carries with it the fiduciary standard.
This should not be complicated and the SEC should not dictate what Merrill Lynch et al, should do. Create the fiduciary standard, let them decide and consumer product litigation will eventually do the work of enforcement.
Robert D. Hamilton, CFP®