Regulate Financial Advisors? YES!!

The Financial Crisis instigated a number of new pieces of legislation with regards to consumer protection. One being discussed right now in the Senate is how Financial Advisors, Planners and a whole slew of similar names should be regulated. Those who know me well could easily assume that I, Bob Klosterman, being mostly a free-market kind of guy would be advocating for a slimmed down, less arduous approach to regulation. Sorry, but this time I have a different point of view.

As pointed out in this New York Times article many have been and will continue to be misleading unless something is done and held to a different standard. Some may consider me to be overly simplistic, but it seems that anyone who holds themselves out to be objective and looking out for a clients best interest should be held to that responsibility. The legal term is a Fiduciary duty. I would agree that everyone in the financial services industry should be held to that high standard. If you job is to sell products there is nothing wrong with that, but if you describe yourself with any term that suggests you are doing this for the clients benefit (Financial Planner, Financial Advisor, Wealth Manager, Retirement Counselor, etc.) you move from a sales representative to a Fiduciary with all the obligations of that role. Those who use titles to obfuscate their true objective need to be flushed out of the financial services world to protect the public. 

For those who would like to share their input with their representatives in Congress the following links are provided to assist in the process. 

http://www.senate.gov/pagelayout/senators/f_two_sections_with_teasers/states.htm

http://www.house.gov/house/MemberWWW_by_State.shtml

For some additional background on the topic of the Financial Advisors and how to select one we have a couple of posts you may find interesting. Objective Advisors? Really? , Finding a Trustworthy Advisor and Why Fee Only?