In order to answer this question, one must first know what a fiduciary is. A simple definition is someone who puts your interests first, or someone who is working for you. Considering the importance of financial affairs in our lives, I would assume that almost anyone would want to know that his or her financial advisor was held to a fiduciary standard.
Although the perception amongst the American public is that financial advisors are working with their clients' interest in mind, this is often not the case. Brokers are not held to the fiduciary standard. Instead, they are supposed to follow a suitability standard. This standard only requires that a client is presented a suitable investment product, versus considering the clients' needs first, as a fiduciary would. As a result, investors are often paying too much for a "suitable" investment, when a lower cost alternative might be available.
The recent financial turmoil has brought this inequity to light for many more Americans. Earlier today, the House Financial Services Committee held a hearing titled, “Industry Perspectives on the Obama Administration’s Financial Regulatory Reform Proposals.” The Financial Planning Coalition, made up of like-minded financial advisors who put their clients' interests first, testified in favor of a proposal that would require all financial intermediaries who offer broad-based financial advice to be subjected to the high standards of a fiduciary. Although regulation should be carefully implemented in order to prevent too much government intervention in our economy, this new standard would be a benefit to many Americans and their financial well-being. I encourage you to contact your U.S. government representative to express your feeling if you agree.
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