A reader under the moniker “III Financial” posted the following response to my December 3 blog, Why Aren’t CFPs Always Subject to a Fiduciary Standard?, about CFPs acting as part-time fiduciaries.
“I faced this dilemma when I worked with an insurance BD while a CFP from 2007 to 2011. For someone who believed in the CFP designation, and the value of acting as a fiduciary, the rules of the system prevent that from occurring. In my duties, I built financial plans for a fee (as a fiduciary), then I had to ‘change hats’ when an insurance product was needed for implementation. By law, an insurance agent is bound to act in the best interest of the insurance company. The way I reconciled it in my head is that I knew I was giving them the best advice for them (fiduciary) while still providing the insurance company with a new client. Until the rules of the game change, one cannot sell insurance and be a fiduciary simultaneously, which is a shame. Plenty of advisers who deal with insurance would love to say honestly that they can act as fiduciaries for their clients.”
So would many advisors who deal with securities. But under the law, often times they can’t either. That’s also a shame.
What III Financial is talking about, of course, is the age-old distinction between “advice” and sales. Now before I get a flood of comments and/or emails, let me say again: there’s nothing wrong with sales or salespeople. As the cliché goes, some of my best friends are salespeople. Heck, my ex-wife is head of marketing for a mutual fund company. And in my many years as a journalist, I’ve often found that the advertising sales folks to be a lot more fun than the editorial staff (present IA and TA editors excepted, of course).
What’s more, salespeople are important. That’s why, in many industries, they tend to make a lot more than those of us do the actual work (did I say that?). And the truth is they deserve it: they bring in the revenues that pay everyone’s salaries. They deserve it because they act as “advocates” for the company they work for, and convince clients/customers to buy their company’s products, or other companies’ products through their company—and not from some other company.