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Financial Planning > Behavioral Finance

Nobel Laureates Call for Fiduciary Standard

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Fiduciary Statement

John C. Bogle, founder of The Vanguard Group, George Akerlof, PhD, the 2001 Nobel Laureate in Economics; Daniel Kahneman, PhD, the 2002 Nobel Laureate in Economics; and Roger Ibbotson, PhD, chairman and CIO of Zebra Capital Management, LLC, and finance professor at the Yale School of Management, are among the thought leaders who support the fiduciary statement, which says: “…we believe that all those who render investment or financial advice must meet the requirements of the fiduciary standard, as established under the Investment Advisers Act of 1940 and affirmed by the U.S. Supreme Court.”

The fiduciary standard requires advisors to put the interests of their clients first.

“Restoring the faith of investors must begin with a demand that investment and financial advisors stand up for the rights of their clients,” Bogle said, according to the Committee’s announcement. Indeed, the majority of brokers in the field want to act in their clients’ best interest, according to a recent Fiduciary Standard Survey of brokers and investment advisors by the SEI Advisor Network and The Committee for the Fiduciary Standard.

The distinguished leaders who have called for the fiduciary standard include:

George Akerlof, PhD
Nobel Laureate in Economics 2001

Dan Ariely, PhD
Professor, Psychology and Behavioral
Economics, Duke University

Cliff Asness
Managing & Founding Principal, AQR Capital

John C. Bogle
Founder, The Vanguard Group

Roger Ibbotson, PhD
Chairman and CIO, Zebra Capital Management, LLC

Daniel Kahneman, PhD
Nobel Laureate in Economics 2002

John D. Markese, PhD
President, American Association of Individual Investors

Don Phillips
Managing Director, Morningstar

Jane Bryant Quinn
Personal Finance Columnist and Author

V. Daniel Radford
Former Federal Reserve Governor
Vice President, Ullico Investment Company

Terry Savage
Personal Finance Columnist and Author

Richard Thaler, PhD
Professor, Behavioral Science and Economics , University of Chicago

Good company

The leaders who signed the fiduciary statement are in good company. Since President Obama called for the fiduciary standard last June in his blueprint for financial reform, the U.S. Treasury, House of Representatives, SEC Chairman Mary L. Schapiro, FINRA CEO Rick Ketchum, Goldman Sachs Chairman and CEO Lloyd Blankfein and Commodities Futures Trading Commission Chairman Gary Gensler–a former Goldman Sachs executive–have all voiced their support for the fiduciary standard for those who provide advice to investors.

“The prominence of these individuals casts this issue in a new light. This is not only a consumer issue. It’s national in scope, integrally part of the looming shortfall in retirement savings and deserving of a White House summit,” Knut A Rostad, chairman of The Committee for the Fiduciary Standard, told Wealth Manager.

The Committee for the Fiduciary Standard has invited top executives from several of the largest U.S. banks and brokerage firms “to follow the lead of these prominent Americans and also sign the Fiduciary Statement. The Committee has sent letters to Brian Moynihan, CEO Bank of America; Sallie Krawcheck, President, Global Wealth and Investment Management, Bank of America; Jamie Dimon, CEO JPMorgan Chase; John Mack, CEO, Morgan Stanley; and Lloyd Blankfein, CEO, Goldman Sachs.”

In response to an article in March 4 article in The New York Times, “Trusted Adviser or Stock Pusher? Finance Bill May Not Settle It,” by Tara Siegel Bernard, Krawcheck wrote a letter to the editor of the newspaper, saying that Bank of America Merrill Lynch supports “enhancement of fiduciary standards across the wealth management industry.” Krawcheck closed her letter by saying, “We are committed to ensuring that the move to higher fiduciary standards does not fall to the wayside. Clients deserve no less.”

Dodd’s new financial reform proposal imminent

Release of the fiduciary statement comes just as Senate Banking Committee Chairman Christopher Dodd (D-Connecticut), is scheduled to release a new draft of financial reform legislation that is expected to delete the fiduciary standard requirement for those who provide advice to investors and substitute a study of whether the fiduciary standard should be required. The House of Representatives passed legislation in December requiring the fiduciary standard for those who provide advice to investors.

The Committee for the Fiduciary Standard is a group of industry leaders who have been invited to meet with senior officials from the SEC, Treasury, House of Representatives, Senate and others to nurture and inform the discussion of the fiduciary standard and its practical application in everyday situations for those who provide advice to investors.

Comments? Please send them to [email protected]. Kate McBride is editor in chief of Wealth Manager and a member of The Committee for the Fiduciary Standard.


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