Once again, the S.E.C. proposal to hold all brokers to a fiduciary standard has run aground. This from a September article in Bloomberg by Jesse Hamilton and Margaret Collins: Retail investors typically put their money in the hands of broker-dealers or investment advisers. Brokers earn commissions on sales and work under a professional standard that requires them to promote products “suitable” for clients. Registered investment advisers work for set fees and manage portfolios under a standard that their advice be in customers’ “best interests.” Read the full article at Bloomberg.com.
Financial Plan Inc is a Registered Investment Advisor operating under the Fiduciary standard. Under that highest of standards we are required to act in our clients’ best interests. Brokers are not held to that standard. They sell financial products on a commission basis. Frankly we don’t see how brokers who are salesmen can ever meet the Fiduciary standard, and at any rate it appears that they will not be required to do so for years to come. Look for our next article coming soon: “Friends Don’t Let Friends Pay Commissions”