The Prudent Fiduciary

Scott Pritchard | Principal

A look at the major issues that are shaping fiduciary best practices today.

Whose Interests Come First? - Part Three

September 2015

When I began this series in March, I did so with an optimistic belief that a new fiduciary standard would soon become the law of the land.

After all, the debate over how to better protect investors from the rampant conflicts of interest in the financial services industry has been underway for years. In fact, I first wrote about the proposed changes in February of 2011 (The DOL Says No Advice Is Better Than "Schlocky" Advice).

After all, the White House Council of Economic Advisers estimates that the lack of a uniform fiduciary standard costs investors $17 billion per year.

Yet, here we are, heading into fall and there is still no resolution.

Is it really that difficult for everyone to agree that the interests of someone saving for retirement should come before the interests of that person’s advisor?

Michelle Singletary of The Washington Post wrote the following in her September 12th column (Is your adviser truly protecting your retirement?):

“The rules on the books now make for an uneven playing field for many of today’s investors, many of whom are overwhelmed by the options and could use some professional guidance. We need to ensure that people are getting the best advice possible to manage their savings, especially when it’s probably all they’ll have to lean on in retirement.”

The good news is that the playing field doesn’t have to be uneven. Unbiased, quality advice is already available, even without a new fiduciary standard.

Maybe my hope for a new fiduciary standard should be replaced by a hope that more individual investors, foundations, and corporate retirement plans simply become aware of their options.

If the government doesn’t force advisors to put their clients’ interests first, then perhaps those clients will gravitate to fee-only firms like Capital Directions.

Maybe this lack of a new fiduciary standard isn’t such a bad thing after all…


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