For far too long, investors have been confused about investment advisors and stockbrokers. Investment Advisors are just that -- stockbrokers are just salesmen. Stockbrokers have loyalty to their companies. Investment Advisors have loyalty to their clients.
Also, stockbrokers can charge hidden fees. Investment Advisors can NOT! For example, stockbrokers can invest your money into mutual funds that pay "kickbacks" (12b1-1 fees) or send the stockbroker and spouse to Hawaii or whatever. Stockbrokers do NOT have a fiduciary responsibility to their clients. Investment Advisors do!
A fiduciary responsibility does not mean an Investment Advisor cannot do something stupid. It does mean we can NOT hide anything from the client! (No mutual fund company ever pays us a dime.)
For years, we have asked that stockbrokers stop selling and adopt the fiduciary standard. They fought vigorously. However, Congress was on our side and instructed the SEC to establish the regulations, which would require stockbrokers to be fiduciaries. After years of inaction by the SEC, the Department of Labor (DOL) finally acted and issued rules requiring the fiduciary standard for all retirement accounts (but only for retirement accounts). Stockbrokers fought back, delaying implementation for over two years. But, neither the President nor the DOL Secretary stood up for the fiduciary standard. Investment Advisors then resorted to the courts, but it looks like that effort was killed by the Fifth Circuit Court of Appeals last month. The Trump-controlled SEC still says they will do something, but it is unclear what or when. More confusion, not less confusion is expected. The Right Thing will wither away . . .
The battle has been lost. Stockbrokers are free to keep getting hidden fees and withholding the truth about their conflicts of interest. They won, and investors lost!
Also, stockbrokers can charge hidden fees. Investment Advisors can NOT! For example, stockbrokers can invest your money into mutual funds that pay "kickbacks" (12b1-1 fees) or send the stockbroker and spouse to Hawaii or whatever. Stockbrokers do NOT have a fiduciary responsibility to their clients. Investment Advisors do!
A fiduciary responsibility does not mean an Investment Advisor cannot do something stupid. It does mean we can NOT hide anything from the client! (No mutual fund company ever pays us a dime.)
For years, we have asked that stockbrokers stop selling and adopt the fiduciary standard. They fought vigorously. However, Congress was on our side and instructed the SEC to establish the regulations, which would require stockbrokers to be fiduciaries. After years of inaction by the SEC, the Department of Labor (DOL) finally acted and issued rules requiring the fiduciary standard for all retirement accounts (but only for retirement accounts). Stockbrokers fought back, delaying implementation for over two years. But, neither the President nor the DOL Secretary stood up for the fiduciary standard. Investment Advisors then resorted to the courts, but it looks like that effort was killed by the Fifth Circuit Court of Appeals last month. The Trump-controlled SEC still says they will do something, but it is unclear what or when. More confusion, not less confusion is expected. The Right Thing will wither away . . .
The battle has been lost. Stockbrokers are free to keep getting hidden fees and withholding the truth about their conflicts of interest. They won, and investors lost!
