BAM Intelligence

The Ironic Conflict Of Interest of the Fiduciary Financial Advisor

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

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Tim Maurer, Director of Advisor Development

The BAM ALLIANCE

As director of advisor development at The BAM ALLIANCE, Tim designs and implements focused educational programs for our advisors around the country. His goal is to prepare them to provide an outstanding experience to each and every client through skillful investment advising and financial life planning.

A central theme drives Tim’s work: Personal finance is more personal than it is finance. Regardless of our income or net worth, Tim believes it is our underlying values and goals that drive our behavior with money, which ultimately determines our satisfaction in work and life. With a passion for relational communication, Tim has been featured on the Today show on NBC, CNBC and ABC’s Nightline, on NPR programs The Diane Rehm Show and Marketplace as well as in The Wall Street Journal, The Washington Post, The New York Times, The Baltimore Sun, Kiplinger’s Personal Finance, U.S. News & World Report and Money magazine, among others.

You can follow Tim on Twitter at @TimMaurer.

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