I recently received an email from a financial planner who “felt he had to respond” to my writing about what it means to be a fiduciary. As a licensed insurance agent and registered rep, he repeated the usual rationalizations about why it’s “better for the client” to be charged a commission (while side stepping the apparently minor technicality that their “advisor” doesn’t actually work for them). And he even came up with a new one: it’s his fiduciary duty to be an agent, because no one can handle his clients’ insurance needs as well as he can. Kudos for creativity, if nothing else.

Yet, his lengthy tome (why do defenders of commissions always write gothic novels about it?) eventually got around to an interesting point (kudos to me for reading that far). To wit: A fee-only planner on a call-in radio show refused to help a widow buy Treasury bonds by saying his fee would be too high.

“That was cruel and heartless… I believe that one of the flaws in the fee-based compensation structure is the development of an arrogant attitude…Well, when it causes widows to be rejected it is not morally superior.”

Ignoring the fact that there are fee-only planners who don’t have minimums (The Garrett Planning Network, comes to mind), and plenty of commission planners who pass on clients that are too small, the question is still a good one: Is there something wrong with advisors (either fee or commissions) having minimums?

In an ideal world, sure, all advisors would help everyone who needs help. But you can’t run a practice that way. Advisors can only handle so many clients; after that service begins to suffer. So you have to draw the line somewhere. Many advisors set aside time each month to do pro bono work. Others refer people to advisors who can help them. What is heartless is not helping people to find the help they need.