Wed, January 21, 2009
Tell Congress That You Want Fiduciary Financial Advice
The National Association of Personal Financial Advisors (NAPFA), of which I'm a provisional member, has initiated a letter-writing campaign to urge members of Congress to make fiduciary investment advice the norm as it reforms the financial industry.
Currently, the investment counsel that consumers receive is regulated according to different standards depending on the status of the adviser. As mentioned in an earlier post, some financial advisers are legally bound to duties of due care, loyalty, and utmost faith (= fiduciaries), while others are bound to lesser standards; in some cases the adviser is merely bound not to commit fraud. In practice, this can mean that an adviser whose job is to sell investment products for his employer may not be required to tell a consumer that his products are not the best choice for that person’s individual situation.
NAPFA has drafted a letter urging senators and representatives to mandate a “fiduciary standard of conduct for all personal financial advisors.” If you like this idea, feel free to download the letter, modify and personalize it, and use it to contact your Congressional representatives to let them know your desires. Regulatory reform of financial services will take place in the context of intense lobbying, but if there is enough consumer input, it could help focus Congress’s attention on the interests of the people who are being protected.
