The Fiduciary Standard requires advisors to put their clients’ interests above their own. But what does that really mean? Barry discusses the Fiduciary Standard with Sharon Epperson of CNBC.Full Transcript
>> The financial advisory industry is on the brink of undergoing the most significant restructuring of regulatory laws governing investment advice since 1940, holding investment advisors to a higher standard. Sharon Epperson has the details.
>> Investing for retirement is challenging, but seeking the appropriate advice can be even more confusing — especially since those selling financial expertise are not all created equal. Efforts in Washington are underway to help change that for brokers, advisors, and financial planners.
>> You’re going to have complete registration and regulation of the advisors, so there’s going to be a lot more protection for people systemically and individually.
>> As a result of the financial reforms that have come from the Dodd-Frank Act, the Securities and Exchange Commission is considering applying a uniform standard, a fiduciary standard to all professionals selling or advising customers on investments. A fiduciary standard is considered the highest standard, requiring financial advisors and institutions to put their clients’ interests ahead of their own. Right now investment advisors are held to this higher standard but not all financial planners. And broker dealers are not fiduciaries. They’re only required to make recommendations that are suitable for their customers.
>> The fact that your advisor isn’t a fiduciary, that doesn’t make them a bad advisor; it just means that there are potential conflicts of interest. You need to understand what they are and make judgments based upon that.
>> Investment advisor Barry Glassman admits even advisors who adhere to the fiduciary standard aren’t necessarily good ones.
>> Just because your advisor is a fiduciary it doesn’t mean that all of their investment advice is going to be correct.
>> The debate over this proposed rule is likely to continue for months. In the meantime, investors can just ask —
>> Are you a fiduciary, and if not, what are your potential conflicts of interest?
>> — and find out how they earn their money because, ultimately, what’s good for them may not be good for you. Sharon Epperson, CNBC Business News .