Home About Archives RSS Feed

The Independent Investor: Financial Planners Held to Higher Standard

By Bill Schmick
iBerkshires columnist
The Department of Labor's fiduciary rule looks "iffy" at best, thanks to a March court ruling. The 5th Circuit Court of Appeals says the agency exceeded its authority in insisting that financial services firms act as fiduciaries when giving advice to most tax-deferred savings accounts. However, some financial advisers are ignoring the courts and are going the extra mile for their clients anyway.
Over the last couple of years, I have written several columns on this issue. A "fiduciary" is someone who puts your best interests above his own and that of his company's. It is a concept that the financial community does not want to see implemented and has gone to great lengths to squash all attempts to do so.
President Barack Obama, recognizing the enormous lobbying power of the financial sector, tried to do an end-run around the financial community, the SEC, and Congress by urging the Department of Labor to implement a fiduciary rule. He almost succeeded, and then came Trump. Although our "populist" president talked a good game during the campaign, he quickly succumbed to the influences of Wall Street and ordered the DOL to "review" its regulation. The rest is history.
However, while brokers and other wealth management advisers, (as well as the annuity and insurance industry) are breathing a collective sigh of relief, one entity, the Certified Financial Planning Board (CFP), is ignoring the decision and going the other way.
The CFP Board, according to its website, is "a non-profit organization acting in the public interest by fostering professional standards in personal financial planning through its setting and enforcement of the education, examination, experience, ethics and other requirements for CFP®certification." Currently, there are 69,500 members, which represent barely 20 percent of financial advisers. However, they represent the creme de la crème of CFPs so now you know where to go when shopping for a financial planner.  
The CFP Board just announced that starting next year, their members will be required to give advice under a new "best-interest" standard in all aspects of financial advice. I asked Zack Marcotte, a 28-year-old, registered investment adviser, who is sitting for his CFP certification this year, what that means to you, the investor.
"The new rule just makes it that much more important that you look for a Certified Financial Planner when evaluating financial professionals. What this all boils down to is if something is recommended to you, it's because it's best for you and not meant to line someone's pockets."
Under the old rules, a financial planner was required to act as a fiduciary when he or she was involved in doing a specific financial plan for their clients. However, financial planners can sell their clients a whole shopping list of services from insurance to brokerage services that were not part of their fiduciary duties. And there was the rub.
It is well-known within the industry that for many financial planners, the actual financial plan itself, is a loss-leader. The idea is to get you, the unsuspecting client, in the door, do the plan for a nominal fee, and make the big bucks by selling you annuities, life insurance, or brokerage services. That changes next year.
By raising the bar, all certified financial planners must act in the best interests of their clients when providing all financial advice. That is great news for consumers. The CFP will be required to recommend only using a brokerage product, annuity, or other insurance product, if it is in the best interests of their clients.
I believe that over time, more and more consumers will seek out only those, like young Zack, who are required by law to act as a fiduciary in all their financial affairs. Hats off to the CFP Board and to all those who have the true interests of their clients at heart.
Bill Schmick is registered as an investment adviser representative and portfolio manager with Berkshire Money Management (BMM), managing over $400 million for investors in the Berkshires.  Bill's forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquiries to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.

Support Local News

We show up at hurricanes, budget meetings, high school games, accidents, fires and community events. We show up at celebrations and tragedies and everything in between. We show up so our readers can learn about pivotal events that affect their communities and their lives.

How important is local news to you? You can support independent, unbiased journalism and help iBerkshires grow for as a little as the cost of a cup of coffee a week.

News Headlines
Mount Greylock School Building Committee Presses Contractor on Auditorium
PEDA: Waterstone Contract Expires Saturday
Adams Selectmen Get Transfer Station Update
Wayfair Bringing 300 Jobs to Pittsfield
Pittsfield Council Approves New Water and Sewer Rates
North Adams Council Restores Fire, Police Chief Titles
Pittsfield Firefighters Donate Christmas Gifts to DCF
1Berkshire Annual Meeting Remembers Klefos, Looks to Year Ahead
North Adams Movieplex Holds 'Five For Free' Food Drive
BHS Expands Rheumatology Services With New Doctor

Bill Schmick is registered as an investment advisor representative and portfolio manager with Berkshire Money Management (BMM), managing over $200 million for investors in the Berkshires. Bill’s forecasts and opinions are purely his own and do not necessarily represent the views of BMM. None of his commentary is or should be considered investment advice. Anyone seeking individualized investment advice should contact a qualified investment adviser. None of the information presented in this article is intended to be and should not be construed as an endorsement of BMM or a solicitation to become a client of BMM. The reader should not assume that any strategies, or specific investments discussed are employed, bought, sold or held by BMM. Direct your inquiries to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com Visit www.afewdollarsmore.com for more of Bill’s insights.




@theMarket (275)
Independent Investor (376)
December 2018 (1)
December 2017 (5)
November 2018 (9)
October 2018 (5)
September 2018 (4)
August 2018 (9)
July 2018 (2)
June 2018 (8)
May 2018 (8)
April 2018 (7)
March 2018 (6)
February 2018 (7)
January 2018 (7)
Europe Selloff Debt Election Greece Debt Ceiling Wall Street Taxes Economy Federal Reserve Deficit Rally Stocks Recession Interest Rates Stock Market Congress Fiscal Cliff Commodities Metals Markets Stimulus Currency Europe Pullback Euro Jobs Energy Banks Crisis Oil Japan Bailout Housing Retirement
Popular Entries:
The Independent Investor: Don't Fight the Fed
@theMarket: QE II Supports the Markets
The Independent Investor: Understanding the Foreclosure Scandal
The Independent Investor: Does Cash Mean Currencies?
@theMarket: Markets Are Going Higher
The Independent Investor: General Motors — Back to the Future
@theMarket: Economy Sputters, Stocks Stutter
The Independent Investor: Why Are Interest Rates Rising?
The Independent Investor: How Will Wall Street II Play on Main Street?
The Independent Investor: Will the Municipal Bond Massacre Continue?
Recent Entries:
The Independent Investor: Will Our Country's Military Win the Next War?
@theMarket: Markets Hope for Trade Breakthrough
The Independent Investor: Sustainability Investing and Millennials
@theMarket: It Is a Black Friday on Wall Street
The Independent Investor: The Origin of Black Friday
@theMarket: Markets Need to Hold Here
The Independent Investor: The Apple of Our Eyes
@theMarket: Stocks Take a Breather
The Independent Investor: Mid-Term Results Take Investor Focus Off Washington
The Independent Investor: Time to Check Your Risk Tolerance