June 9, 2013
I think that things should be kept very simple as it pertains to changing how financial services professionals deal with the public.
First, we need to agree that the Fiduciary Standard is a high standard. It should not be watered down, nor should the definition change to accommodate different situations.
The fiduciary standard also has nothing to do with how products are sold and whether there is a fee or commission. The fiduciary standard is a high standard, and anyone who is a fiduciary is bound by it, whether it is a product sale on a commission or a fee only investment adviser. This whole discussion needs to end. It clouds the truth.
The big fix, in my eyes, is that every client situation must be governed by a fiduciary. If the adviser working the case does not have the experience, credentials or confidence to act in a fiduciary capacity, then they can not be in the business of giving one on one advice to clients. Simple. They could meet with clients, perhaps, like a nurse practitioner or something, but every recommendation would need to be approved by a fiduciary at the firm. In other words, someone will need to be legally required to be on the hook and state that "I believe this recommendation is in the best interest of the client and I am willing to go to court over it"
Perhaps there is some kind of experience requirement and/or examination to be a fiduciary, but the main requirement is that the adviser accepts the responsibility, even to the point of it being on his/her business card.
This is simple and avoids all kinds of other confusing issues and distractions. Simply stated, every client has a fiduciary working for them, whether the adviser or a supervisor.
AJ DiLiberto