July 2, 2013
DO WHAT IS RIGHT, LET THE CONSEQUENCE FOLLOW.
In 1940, when the integrity and ethical standards of an individual "professional" were much higher than they are today... our forefathers had the foresight to create the Investment Advisers Act of 1940, which in effect, created a fiduciary requirement for any "advisor" to actually give advice that is in the best interest of the consumer.
Broker/dealers insurance salesmen were seemingly exempt from this standard because of 2 stipulations:
1) They weren't giving advice, just executing trades and transactions
2) They weren't being compensated for advice
Those 2 stipulations are no longer met by broker/dealers or insurance salesmen posing as "Financial Advisors" and giving advice that is only suitable to clients, not in the clients best interest.
John Adams said the primary purpose of a government is to protect the sheep from the wolves. The average American consumer places an alarming amount of trust to anyone posing as a "financial advisor". Not all advisors are created equal, and since consumers aren't educated enough to protect themselves, we need a paternalistic government to step in and require an un-watered down full fiduciary standard on anyone that holds themselves out as an "advisor".
I'm tired of seeing "advisors" whose advice is consistently to buy products that give the biggest kickback or commission to the "advisor" selling it. I'm tired of seeing consumers get taken advantage of.
It's obvious that "professionals" in the industry won't voluntarily stand up and hold themselves to a higher standard, so the government needs to do it for them. There are some really great people in the financial planning industry, and their reputation is getting tarnished by all of the "suitability" guys claiming to do the same thing.
When doing your cost-benefit analysis, don't overlook the cost to each uneducated consumer who is either getting exploited or who doesn't get professional advice they need -- because they don't know who to trust.
DO WHAT IS RIGHT. LET THE CONSEQUENCE FOLLOW.
Luke Dean, Ph.D.
Financial Planning Program Director
Cotsakos College of Business
William Paterson University