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Is the Fiduciary Standard Really a Political Issue?

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Over the past couple of years, I (and I’ve noticed, other advocates of a fiduciary standard for anyone who provides “financial advice”) have been accused of basing that position upon our “liberal” political beliefs. My standard response is that I don’t think my blogs and columns should be used to as a forum to voice my personal politics, regardless of what they are.

As I see it, my job is to help independent financial advisors better serve their clients, and to possibly create a client-centered profession to help them do it.

With that said, I’m feeling compelled to answer those critics, not so much in my own defense (well mostly not), but for conservative advisors, and observers, everywhere who also support comprehensive, fiduciary financial advice for retail investors.

In the interest of full disclosure, I have been a conservative my whole life, even when it wasn’t very popular among my generation, back in the ’70s. But I also like to think that I approach each political issue on its own merits, rather than being bound by a predetermined ideology.

And perhaps it’s due to this perspective, but I just don’t see anything particularly “liberal” about the notion that all professionals — including financial advisors — should be held to a standard of providing advice that is the best interest of their clients, rather than their own, or that of their employers.

Are we, as conservatives, really suggesting that our “free market” ideology includes allowing people to hold themselves out as something that they are not? Should we just let anyone who wants to, call themselves a doctor, or a lawyer, or an accountant, or an engineer? And leave it up to the consumers to figure if their advice is unbiased, or whether they are qualified to give any advice at all?

Of course not. And why? Because we know that in those and many other situations, consumers are not qualified to determine the veracity of the “advice” they are getting. That’s why we have “professions” made up of people who are legally required to use their vastly superior knowledge and experience in the best interests of their patients, students or clients.

So, are we saying that we don’t think personal finance isn’t as important to the lives of most people as is their health, their businesses or their compliance with the laws? Again, of course not. We all know that our finances play a major role in determining the happiness, the health, and even the outcome of our lives, and those who depend on us.

So how can we possibly be arguing that most investors either don’t need or don’t deserve financial advice that’s in their best interest? Now, I know what some of you are going to say, and I agree: Some investors under some circumstances don’t need financial advice. For investors who already know what they need (even just think they do), a salesperson, or even an order taker, would be sufficient.

As I’ve said many times, there’s nothing wrong with salespeople, in securities, cars, clothes, furniture, etc. But, again, I don’t think there’s anything particularly “liberal” about adding the caveat that the client understand they are being sold, rather than receiving impartial advice. And, as we all know, the financial services industry has gone to great lengths to blur that line; advisor vs. adviser? Really?

Finally, to my fellow “conservatives,” who seem to believe that client-centered fiduciary advice is a political issue: You’re not helping the cause. In most polls, financial services already receives the worst “trust” ratings on the planet. Every time you argue that all “advisors” shouldn’t be fiduciaries, or that smaller investors will be harmed if their advisors are required to act in their best interests, we drop a few more points, both as an industry and politically.

Yes, you’re entitled to your opinion. But please stop treating the fiduciary issue as a political debate. It isn’t, and you’re making the rest of us conservatives look bad.