August 29, 2010
All individuals or entities providing financial advice directly to an individual for remuneration should be held to the same standard, namely a fiduciary one.
There are two difficulties for individual investors that are extremely are to overcome when faced with advice or recommendations from a financial advisor. One is that neither the SEC nor any other agency is really agressive in protecting the investor. The SEC only takes action after an advisor's actions have had an adverse effect and never makes the investor whole, at best the mis-behaving advisor is required to promise to not do it again and perhaps to pay a fine which at most is a slap on the wrist. Secondly, if an investor attempts to resolve a matter on their own the scales of justice are heavily weighted against them. Most if not all brokerages, etc require the investor to sign away most of their rights before hand. The investor seldom has the financial resourse to cope with mis-behavior.
There is another form of mis-behavior that is even more insidious and that is the conflict that exists between the companies that provide the "research" and management of mutual funds vs the decision making bodies supposedly in charge of the funds. The fund managers are largely under the control of the parent companies and the directors of the funds are so beholded to those companies that they are incapable of independent negotiation of fees. This is further exacerbated by the processes for picking fund directors, while shareholders supposedly elect directors the system is rigged against them in the same way it is for shareholders in corporations.