Fiduciary financial advice that truly puts the client’s best interests above all else is exceptionally rare in the world. That needs to change.
As explained in the video clip below, 98% of financial ‘advisors’ today work for product sales firms or in places where they earn higher compensation for weighting assets toward higher risk equity and corporate debt products. Not surprisingly then, most clients/customers are steered into high fee, high risk products at every price, regardless of return probabilities, their life stage or risk tolerance.
Less than 2% (5000 out of 310,000) of financial ‘advisors’ in America have structured their practice as true fiduciaries, paid only by their clients, with no conflicts of interest (like being paid more on certain products) or secret profits. The ratio in Canada is similar. Our firm Venable Park Investment Counsel is one of the 2%.
The fact that the financial sector has successfully been fighting and delaying the requirement of a fiduciary standard in advising and asset management says everything about where industry allegiances lie–with their own profits above all else. Clients will keep paying a heavy cost for this until they demand change.
People talk about the “new” fiduciary standard which is ironic. The truth is that fiduciary standards are a long standing legal duty that’s been required of trustees and professionals in other fields for at least hundreds of years. The fact that financial ‘advisors’ have ducked this requirement for so long, is the outrageous part.
Distinguishing the differences between a financial advisor and a fiduciary can be difficult. Josh Robbins explains how advisors can separate themselves. Here is a direct video link.
The new fiduciary rule from CNBC.
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