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Forget the Fiduciary Fight
It appears the U.S. Congress is set to fail the American public and allow major financial services companies to continue to provide the public bad financial advice. The Senate continues to fight against a fiduciary standard apparently unwilling to make difficult political decisions which could cost them major campaign contributions.
But why are those of us who would consider ourselves financial planners fighting to have other professionals act as fiduciaries? Why are we lumping ourselves together with the entire financial services industry when we should be working to separate ourselves? I say, let them have their conflicts of interest and their lack of focus on clients and their confusion. Let's take this opportunity to create true separation from the product distribution industry.
People are desperate for good, honest financial advice. Let's grab the mantel as financial planners. Let's band together and work with one another to create a profession dedicated to serving people. Let's move to a different sandbox and leave the financial services people alone.
Let's find a place where we can sit around a table and decide what financial planning is and what it means to be a financial planner. We can welcome everyone who wants to put their clients interest first as the base qualification for admittance, then begin hashing out a definition. We can invite the Certified Financial Planner Board of Standards, Inc., the Financial Planning Association, and the National Association of Personal Financial Advisors to join and be integral to this movement. Let's finally make this break and plant our flagpole. Let's lay claim to being the true profession to help people with their financial well-being. If you don't like what we decide, you will certainly have every right to leave and return to the financial services industry.
I like to occasionally ask myself my assumptions might be wrong. I asked myself this question about the fiduciary issue, and came to the conclusion I have outlined above. Now I ask you to take a moment and consider whether your assumptions might be wrong also.
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4 comments:
Well said, Nathan.
While I think that working with a fiduciary advisor is generally better than the alternatives, I also believe that most consumers really don't care what I call myself. In fact, I've explained it to a couple of clients and asked for feedback, and they said they work with me because they like and trust me -- not because I'm a fiduciary.
They want someone they trust to help them make the most of their lives.
NAPFA members not only put their clients first but reaffirm their committment to a Fiduciary Oath each year upon membership renewal. Additionally the three organizations you mention in your post have banded together to lobby Congress on the Fiduciary standard and other issues of common interest. Russ is right in that most clients don't know or care about the Fiduciary Standard, they hire us because they trust us.
Investors are their own worst enemies, unfortunately. They'll spend way more time researching their new car or TV vs. the person who will manage their financial future. Go figure.
The other issue at hand is the fact that financial service lobbyists will continue to wine and dine Senators and Congressman/woman in order to block the passage of important bills (like the fiduciary fight). There's way too much money being thrown at Congress by financial services special interest groups/lobbyists. I'm not sure if that will ever change.
While I agree with the sentiment, I must respectfully disagree with your conclusion. If we want what's best only for US (true fiduciary planners), we'll do just as you suggest and decouple from the financial services industry. However, if we want what's best for CONSUMERS and financial planning as a whole, we must engage in the broader discussion and lobby for a true fiduciary standard for everyone who holds themselves out as a financial advisor.
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