The Trump administration’s move to delay implementation of the Department of Labor’s fiduciary rule has inspired me to delay implementation of my commitment to remain silent on matters of public policy and politics. It’s that important.
It seems pretty obvious that those in the financial establishment who oppose the rule do so primarily out of self-interest. After all, it’s estimated that they will lose billions in profits if the final rule goes into effect. I get it.
But I was fascinated recently when a member of the media wondered aloud if my advocacy for a wider fiduciary standard was also simply an outgrowth of my own bias.
Indeed, who’s to say I’m not just grinding my own axe on this issue? Maybe I’m in favor of all financial advisors being held to a fiduciary standard because I’m a fiduciary financial advisor and part of a national community of financial advisors that supports the fiduciary standard.
That would be a convenient rebuttal from the anti-fiduciary community, but here’s the (huge) problem with that rationale:
While those in the financial services industry opposed to the rule understandably don’t want it because it cuts into their profits, the fiduciary community as it currently stands actually loses a clear competitive advantage if everyone has to be a fiduciary. Why? Apparently informed consumers actually like the idea that their advisor has to do what’s best for them. Imagine that!
Here’s how financial industry maverick Jack Bogle put it in his recent New York Times Op-Ed:
It simply doesn’t seem like a good business practice for Wall Street to tell its client-investors, ‘We put your interests second, after our firm’s, but it’s close.’
It’s bad business to be publicly against your clients’ best interest—and it’s good business if your competition takes such a stance.
Perhaps, then, fiduciary advisors are for the fiduciary rule simply because they’re, uh, fiduciaries.
This commentary originally appeared February 24 on Forbes.com
By clicking on any of the links above, you acknowledge that they are solely for your convenience, and do not necessarily imply any affiliations, sponsorships, endorsements or representations whatsoever by us regarding third-party Web sites. We are not responsible for the content, availability or privacy policies of these sites, and shall not be responsible or liable for any information, opinions, advice, products or services available on or through them.
The opinions expressed by featured authors are their own and may not accurately reflect those of the BAM ALLIANCE. This article is for general information only and is not intended to serve as specific financial, accounting or tax advice.
© 2017, The BAM ALLIANCE