The Big Guys Are Still Fighting The Fiduciary Standard

I have written several times about the prospect of including the fiduciary standard as a standard for stockbrokers and insurance agents. Despite the senate passing the new law on financial services regulation the issue is still open as the House and Senate versions treat the issue differently. Kathy Kristof of the la times writes:

Two similar versions of financial reform — the one approved by the Senate on Thursday and the one passed by the House in December — must now be reconciled to create a final law.  ...

Now there's a last-ditch battle to determine whether the reform package ultimately will require all financial advisors to be fiduciaries, or trustees for their clients, as the House bill requires.....

When the Senate voted to cut off debate on financial reform Thursday, tough language demanding that all advisors be held to a high standard of trust was sidelined for a provision that would just have securities regulators "study" the issue. That would leave brokers and insurance agents able to continue with business as usual. 

Most individuals aren't aware of this issue and dont realize that registered investment advisors (like me) are held to fiduciary standards brokers and insurance agents aren't. As the same article notes;

This fiduciary provision is simple, says Bob Webster, a spokesman for the North American Securities Administrators Assn. It demands that financial advisors — regardless of whether they call themselves "wealth planners" or "investment specialists" — put their clients' interests ahead of their own.
If they have a conflict of interest, they have to disclose it. If they think an investment you own or a product they're selling isn't good for you, they have to say so.
You thought that was already true? Think again,.....

Kristof goes through a few myths used by the industry against the fiduciary standards and debunks them. Here's one

Myth: Imposing a fiduciary standard on all financial advisors would deny investors access to valued products and services.
Reality: Investment professionals could sell exactly the same products they sell now, but they would not be able to tell you that they were offering impartial advice when they were simply trying to sell a product that would earn them a commission......

Brokers and insurance agents take great pains to obscure the difference between advisors who must look out for your best interests and those who don't have to. That leaves investors learning the lesson of who they can trust too late — when they're already stuck with a high-cost, low-value product that enriched the advisor rather than the investor. It's time to stop calling salesmen advisors.