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ALWAYS CONSULT YOUR INVESTMENT PROFESSIONAL BEFORE MAKING ANY INVESTMENT DECISION

March 20, 2018 | Fiduciary Rule Reversal: The Outrage Continues

Danielle Park

Portfolio Manager and President of Venable Park Investment Counsel (www.venablepark.com) Ms Park is a financial analyst, attorney, finance author and regular guest on North American media. She is also the author of the best-selling myth-busting book "Juggling Dynamite: An insider's wisdom on money management, markets and wealth that lasts," and a popular daily financial blog: www.jugglingdynamite.com

The fact that the financial sales/advice business has successfully skirted the duty to put the client’s best interests ahead of their own profits is an outrage in a world dependent on fiduciary professionals for advice in many critical areas every day.

This discussion with Elliot Weissbluth, Founder and CEO of HighTower Advisors, on the rollback of DOL’s Obama-era fiduciary rule, and what it means for financial advisors and investors is on point.  Here is a direct audio link.

However even pro-fiduciary discussions fall short in scope when they focus just on the selection of picking one lower fee product over another.

Well before one gets to product selection, there are many individual details that a fiduciary must ask and consider if they are to render truly client-focused advice.  First and foremost is to ask about a client’s personal financial means including their income, DEBTS, dependents, assets and liquid savings.

Generally, it is in the individual’s best interests to review their budget/spending, pay off their personal debts (mortgages too!) and build up cash savings, before they get to making non-registered investments (outside of tax-sheltered accounts).

If someone has non-registered savings accounts and personal debts, usually the best advice is to use the non-registered savings to pay off their debts, even though this means they would have less capital to give to a financial advisor or portfolio manager.

If a financial advisor is not reviewing this issue and making this recommendation at the expense of capital that they might otherwise have brought under management, they are not putting the client’s best interests first.

And if a advisor/manager works in a place where they are paid a higher fee on client assets that are allocated to equity securities (higher risk) over fixed income (lower risk), this is also a conflict of interest that threatens their fiduciary responsibility.

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March 20th, 2018

Posted In: Juggling Dynamite

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