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Archive for August, 2012

Emerging Issue for Investors – What Advisor Titles Mean: Why it’s Critically Important

For investors across all wealth categories, confusion over broker/advisor titles is rampant and material. Why? Because marketing titles like “wealth manager” or “financial advisor” don’t tell investors whether they are dealing with a salesperson or an investment advisor –who always must put the investor’s interests first.

See “Picking the Best Wealth Advisors From the Rest


The potential harm for investors is a political issue, as the SEC and Department of Labor continue work on fiduciary requirements for brokers that are like the fiduciary requirements already in place for investment.  Big bank brokers back Congressional representatives that vote to starve the SEC of funding it already earns, which doesn’t cost taxpayers a dime (but Congress, apportioning the SEC budget, keeps hundreds of millions of dollars the SEC takes in via fees for listing and trading), hoping keep the status quo aka no fiduciary rules for brokers.

What’s the Harm?

If investors, saving for retirement, get advice that is in their broker’s interest, they may pay substantially more in fees and be sold more risky securities, materially harming their chance retirement resources.  A “1 percent difference in fees and expenses would reduce your account balance at retirement by 28 percent,” according to the Dep’t of Labor.

If Congress wants to be able to hold down costs for Social Security, it should overwhelmingly back fiduciary duty for advice to investors, giving investors a better shot at achieving their retirement goals.

Here’s the Most Surprising Finding: 

Most brokers, investment advisors and dually registered advisors (87%) in the field agreed in a recent survey there should be clearer differentiation between product providers and advice providers.

A majority (71%+) say the titles “advisor,” “consultant,” and “planner,” imply that a fiduciary relationship exists.” But that’s frequently not the case.

See Survey Report: Trustworthy Advice: Is the Fiduciary Standard the New Normal for Financial Advisors?


–Kathleen M. McBride