Advisor Corner

Advisor Corner

Currently, brokers and investment advisors are subject to two different standards when it comes to their investment recommendations



      Advisor Corner

Question: Currently, brokers and investment advisors are subject to two different standards when it comes to their investment recommendations. Do you think both brokers and RIAs should have a fiduciary duty, meaning that investment recommendations must be in the best interest of the customer and not merely suitable?

Roman M. Polnar Name: Roman M. Polnar
Title: Founder and Managing Partner
Firm: Pillar6 Advisors LLC, San Francisco
Firm Model: Advisory


“Do I think there should be a fiduciary duty for brokers and RIAs alike? Yes. Do I think it’s going to happen anytime soon? No, because it’s far from being a quick and easy fix.

“Clients are left generally unaware of the potential impacts of a fiduciary versus suitability standard: What is the difference between the two? What are the financial implications? How does it affect the relationship with their advisor? Putting greater emphasis on public awareness and education will empower our clients to make educated decisions and ask the right questions. Until an industry-wide fiduciary standard takes hold, we all owe it to our clients to continue to provide accurate information and guidance to ensure they make the right decisions that impact their financial well-being and that of their families.”

Joseph A. Graziano

Name: Joseph A. Graziano
Title: Vice President
Firm: Future Financial Planners Inc., Bayonne, N.J.
Firm Model: Brokerage and Advisory


“I think there should be a fiduciary duty. I and many of my colleagues already hold ourselves to a fiduciary standard. Clients appreciate the clarity and honesty. Most advisors are already working as fiduciaries and if clients were asked today whether their financial advisor is a fiduciary, I would bet most of them would say, ‘absolutely.’

“The SEC is very likely to adopt change, especially as we emerge from a prolonged period of confidence destruction in the overall financial markets. Clients need confidence in the markets and in our industry as a whole. The answer has always been additional regulation. Whether or not this has been effective is questionable. The SEC will adopt change but enforcement will always be the challenge.”

Larry Swedroe

Name: Larry Swedroe
Title: Principal and Director of Research
Firm: Buckingham Asset Management LLC, St. Louis
Firm Model: Advisory


“For decades we have heard the absolute nonsense that the small retail investor will not be able to get service if the suitability standard is dropped. I think that’s absurd. If stockbrokers can make, say, $500 through the sale of commissioned-based products, why could they not charge the same $500 as an advisory fee and avoid conflicts of interest? The hourly fee, or flat fee, allows advisors to recommend products that are in clients’ best interests, not ones that generate the most commissions. For failing to mandate a fiduciary standard, the members of Congress should be ashamed of themselves.”

David A. Peterson

Name: David A. Peterson
Title: Registered Principal
Firm: Peak Capital Investment Services LLC, Denver
Firm Model: Brokerage and Advisory


“I think there should be a fiduciary duty for brokers and RIAs alike. The public doesn’t know the difference between someone who is acting in an advisory capacity and someone who is selling a product. On a not too infrequent basis, I have someone who comes to me extremely frustrated with a product that he or she doesn’t fully understand, which was purchased from a salesperson out to generate a commission. In this political environment of increasing regulation, I believe the SEC could very likely adopt this change or at least move closer to it.”

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TAGS: Research
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