Below is a link to a recent article in the Wall Street Journal. The article is an opinion piece regarding the Department of Labor’s recent activity to hold all financial advisors to a fiduciary standard when advising clients.
While we normally agree with the Wall Street Journal, we disagree with this article. The thrust of the article is that the new proposed fiduciary standards that certain advisors will have to abide by will drive up the cost of providing financial advice. While this point is being debated and under review by the DOL, the greater issue is not about costs. The real question is whether such a fiduciary standard will lead to greater independence and less bias in favor of investments with greater fees for the advisor. Fee based financial planners already are held to a fiduciary standard. Why not brokers at large Wall Street firms?
While costs are important,and we are very sensitive to fees, perhaps independent/unbiased recommendations trump costs. We would propose that the additional fees and lost return from less than independent/unbiased advice will do far greater harm than the additional costs, if any, of a fiduciary requirement, which most average people believe they are receiving anyway.