Intellectuals and thought-leader types in the financial realm tend toward unanimity when it comes to the debate over whether there ought to be a fiduciary standard for professional advice givers.
“If someone would like to seek advice on a specific financial product, or about their own overall situation, they should get it from a financial advisor working to the fiduciary standard who is familiar with their financial situation,” says Helaine Olen, author of a new book blasting the personal finance industry, called Pound Foolish.
“I’ve seen way too many people hurt financially as a result of taking the counsel of salesmen promoting various financial products who don’t have a legal responsibility to act in their customers’ best interests,” Olen told AdvisorOne.
Yet the fiduciary standard may still seem inadequate, even among its staunchest promoters, for a variety of reasons, among them human moral failings, such as the propensity some have of skirting even clearly laid rules.
Pershing Advisor Solutions CEO Mark Tibergien’s article Fiduciary in Name Only, first published in Investment Advisor, has raised awareness of the potential inadequacy of the fiduciary label.
“I cringe when I see negative news stories involving a registered rep, trader, investment banker, hedge fund, wealth manager or financial planner…As head of a custodian that serves RIA firms and their clients, I suffer even stronger emotions when learning of an indictment or finding against a fiduciary advisor,” Tibergien wrote.
Tibergien seems to despair that regulations, however clear, fail to deter a large cohort of financial professionals “who choose to ignore them.” He calls on individual advisors to carefully monitor their own conduct under various potential conflicts he describes.
Responding to Tibergien’s article, Dalbar CEO Lou Harvey (right) told AdvisorOne, “I believe that the article actually understates the severity of the problem and the steps that will be necessary to prevent further damage.”
That is because the marketplace has come to recognize the value of fiduciary advice, thereby conferring a hugely attractive competitive advantage on those claiming to put client interests first.
“At a time when wearing the moniker of ‘fiduciary’ requires no more than paying for a short online course or printing a deceptive designation on a business card, there is little doubt that we will see the number of fraud cases continue to grow,” Harvey says.
“Imagine, for example, if anyone could describe themselves as ‘doctor’ or ‘attorney’ but the real ones were ‘fiduciary doctor’ and ‘fiduciary attorney,’” Harvey adds.