Investment experts: Enact a fiduciary standard now

“The difference between a fiduciary standard and a commercial standard is significant. It’s a difference of ‘kind’ not just ‘degree.’ It could be compared to the difference between a medical doctor and a drug company sales rep. Your doctor’s responsibility is to do what’s best for you, the patient. The drug company sales rep’s job is to sell medications.”

Bogle agreed, saying, “Surely it should be clear to clients whether they are relying on a trained investment professional paid solely through fully-disclosed fees, or a sales rep who sells the products and services of the company he represents, whether life insurance, annuities, mutual funds or anything else.”

Citing recent scandals like the notorious Madoff case, Aikin explained that had established rules designed to meet a fiduciary standard been more carefully and fully enforced, much of the wrongdoing could have been detected early on, saving investors billions of dollars in lost value and lessening the severity of the current financial crisis.

“A fiduciary standard is critical to restoring trust in capital markets and intermediaries,” said Aikin. “Only a fiduciary standard requires complete transparency, a level playing field and business and investment practices designed to put investors’ best interests first, ahead of the advisor’s. Restoring that trust is the only way to truly stabilize the markets and sustain a viable and long-lasting recovery.”