About a year or so ago, I was having lunch with an attorney friend of mine with whom I often play golf. We got to talking about financial advisors and I pointed out that under the Investment Advisers Act of 1940, registered investment advisors have a fiduciary duty to their clients, but that stockbrokers are exempted from such a duty. His response was classic: “That can’t be right; you must be mistaken.” I pointed out that I’ve been covering financial advisors for nearly 25 years, and I’m rather confident that’s what the ’40 Act says. But I don’t think I ever convinced him, a well-educated, practicing attorney, that stockbrokers and other financial planners who hold themselves out as financial advisors have no such duty to put their clients’ interests ahead of their own, unless they are also RIAs.
Fast forward to a month or so ago, when a NAPFA board member brought to my attention a survey that her organization conducted during this past winter.