As corporate malfeasance becomes more and more obvious to the citizens of the world, your neighbor, my neighbor, the neighbor’s neighbor are all “Mad as Hell and not going to take it anymore!” How long can we all stand by while these corporate fat cats get to take huge risks without any real risk to them or their company?
I am all for free markets, but as history as shown time and again, greed can get in the way of civility. And as much as I dislike politicians trying to control more and more of our lives, we have to have someone keeping things in check.
Something floating around in the Wall Street Reform package is a standard of fiduciary behavior. The bill that emerged from the Senate Banking Committee in March calls for a Securities and Exchange Commission study on whether broker-dealers who provide investment advice should meet the same fiduciary obligation as investment advisers. An amendment written by Sen. Robert Menendez, D-New Jersey, and Sen. Daniel Akaka, D-Hawaii, would replace the Senate provision with one from the House bill. That provision instructs the SEC move ahead with writing a universal fiduciary standard for investment advisers and brokers giving advice.
Now a moderate Republican has entered into this hotly debated topic. Sen. Susan Collins, R-Maine, plans to offer an amendment on fiduciary standards that could be more sweeping than a controversial proposal in a House bill passed last year.
An aide to Ms. Collins said that specific language for a specific amendment has not yet been drafted. But at two hearings last week, Ms. Collins indicated that she may favor imposing fiduciary requirements on broker dealers for both retail and institutional investors.
I strongly encourage you to write to your representatives both in the senate and the house, and tell them to pass a bill with these standards.
In case you are not familiar with Fiduciary Standards, you can read more here.
Here is my firm’s (and my personal) pledge:
1) I will always put the client’s best interest first — ahead of my own and that of my firm and its employees. As defined by federal law, I will act as a fiduciary.
2) When selecting investments, I will act as the client’s agent, seeking the best investments at the best prices at all times.
3) While neither I nor anyone can promise superior investment returns, I will provide impartial advice and act with skill, care, diligence and good judgment.
4) I will provide full and fair disclosure of all important facts, including my compensation from the providers of the products and services I offer, as well as all fees I pay to others on your behalf.
5) I will fully disclose and fairly manage, in the client’s favor, unavoidable conflicts.
Compare that with your investment advisors’ personal and corporate pledge. In fact, copy this pledge onto another document, and ask him or her to sign it. If they won’t, you should take your money and run, don’t walk, to someone who will.
About the Author:
Roger P. Simard, CFP®
Roger P. Simard is the founding principal of Genesis Financial Advisors, LLC and Genesis Tax Advisors, LLC. He heads the firm’s corporate and personal financial planning practice and oversees all operations. Mr. Simard concentrates his work in the fields of financial planning, real estate investing, tax planning, and portfolio management. Mr. Simard is a Certified Financial Planner™ and has over 19 years of experience helping individuals and businesses achieve financial success. Mr. Simard was a speaker for The Prudential Spirit of Community Awards, a nationwide youth recognition program honoring secondary school students for outstanding service. He is a frequent speaker and radio guest on business and taxation issues and successful investment strategies and has been quoted in the Personal Real Estate Investor Magazine.