August 30, 2010
I am not in favor of requiring all advisors to adhere to the Fiduciary Standard. Doing so would have a domino effect of unintended consequences including:
1) It will increase the cost of doing business through higher administration costs by the advisor and increased EO insurance. Advisors will have no choice but to pass this along to their clients by way of charging fees when they didnt in the past or increasing their existing fees.
2) Higher costs will impede ability for middle America to receive quality advice from a professional – is this really the intention when the vast majority of Americans have not saved enough for retirement or are woefully under insured? It will result in more Americans being dependent on the government.
3) More Americans will look to receive their advice from TV personalities who diagnose and provide solutions within a 90 second sound bite. Who regulates Suze, Dave and Clark? Are they even listed on FINRA Broker Check?
4) Who will be the judge of what is in the best interest of the client? The only ones who stand to benefit will be the trial lawyers, not the clients.
Most advisors have advanced designations such as CLU, ChFC or CFP or belong to a quality association such as NAIFA or SFSP which carry their own pledge of fiduciary standard. Instead of using tax dollars to add another layer of bureaucracy, use it to develop public service campaign aimed to educate Americans on how to find a quality advisor.