Will Brokers Ever Change?
Posted on February 4, 2011
Filed Under Investor Mistakes, Mutual Funds, Personal Investing
In my blog post of 12/8/10, “Fiduciary: Answering to a Higher Standard,” I pointed out how Registered Investment Advisors must adhere to tougher rules than stock brokers and some other financial professionals. Recently, my concerns were reinforced. On 1/24/11, the National Association of Insurance and Financial Advisors wrote:
“NAIFA’s fundamental concern is that the potential additional costs and increased potential for liability of applying a ‘one size fits all’ fiduciary standard of care to the broker-dealer business model could result in middle- and lower-market investors having less access to the account services and investment advice that are currently being delivered by registered representatives of broker-dealers.”
In other words, the brokers, as represented by NAIFA, seem to find it hard to do the right thing (accept the tougher fiduciary standard) for clients who are not wealthy.
The rules about fiduciary standards could change once regulators work through this issue. Whether or not that happens, it’s the me-first, client-second broker mindset that concerns me. And that likely won’t change, regardless of any new rules that might come along.
Millions of American investors are likely paying higher-than-necessary fees for stocks and bonds, mutual funds, and various insurance products such as annuities. Almost certainly, people close to you are paying those higher fees. Perhaps you can help them learn about the lower cost alternatives.
The more I learn about brokers, the less respect I have for them.
http://www.naifablog.com/2011/01/fiduciary-study.html?asset_id=6a00d83453a48369e20148c7f5ca8d970c
Related posts