Give Yourself a Gift This Holiday Season: Hire a Fiduciary not a Salesperson

With a new Republican administration in the offices of President and dominating both the House and Senate it comes as no surprise that, since taking office nearly a year ago, President Trump and the GOP have decided to delay the DOL fiduciary rule indefinitely. Many opponents of this roll back on regulation say that it is denying the American people of transparency and their right to hire someone that they know will act in their best interest as an advisor. What is overlooked is the fact that investment advisors are already required to act in the best interests of their clients as fiduciaries. Brokers, on the other hand, are salespeople who are recommending investment products that, although may be suitable, are not always the best choice for their clients.

The issue is not whether the government should pass a law requiring brokers to live up to the same standards that I and many of my colleagues have been sworn to uphold for decades. The issue is that people should know the difference between an investment advisor and a salesperson.

Brokers (and others selling financial products) use many of the same titles used by investment advisers, such as “financial adviser,” “wealth manager” or “financial planner.” None of those titles are regulated and none of them require adherence to the fiduciary standard. According to research conducted by Leisa Flynn and G. Wayne Kelly of the University of Southern Mississippi, more than half of the customers surveyed believed that a financial adviser is held to a fiduciary standard and that over a quarter of respondents believed the same to be true about investment sales representative (brokers)[i]

So why not a law? It is a fundamental cornerstone of conservatism that businesses should be able to conduct their business with little interference from government. Also, there may be an easier solution than trudging through the muck and mire of red tape that comes with such a sweeping federal regulation put forth by the Department of Labor. A lighter regulation that simply changes the ability of brokers and investment sales representatives to use the same or similar titles as that of legitimate fiduciaries. If brokers could only use the title investment sales representative, then customers would know that they are in the business of sales and, in that, would understand that the product they are selling will directly benefit them in the transaction.  

The Securities Industry and Financial Markets Association has estimated that the DOL fiduciary rule would initially cost brokerage firms $4.7 billion to comply with the rule, with ongoing costs estimated at $1.1billion.[ii] This might have the unrelated effect that those with smaller portfolios would be unable to invest because the administrative costs of the brokerage firms would outweigh the benefit that they would have to help people invest their money in affordable products.

As the year comes to a close and we are all looking at the same news cycles with everything being a partisan stance from marriage to race to harassment to taxes to money, it is important to look at something that could bring us all together for once. No one wants to see their parents be taken advantage of by financial professionals who see their bottom line before their clients. It is highly unlikely that much will come in terms of any type of regulation on this is the next year since there are so many other fish to fry nowadays. I for one will continue to do what I always do. Bound by my commitment and duty to uphold the fiduciary standard, I will act in the best interests of my clients and make investment decisions on their behalf that benefit them before taking into consideration of how it would benefit me or my firm. I take no money for the investments I recommend other than the percentage earned on the investment itself as a management fee.

Around this country, there are hard-working men and women who put the faith in “experts” to manage their hard-earned dollars. Whatever the government decides to do with regulation has no bearing on how I have, and always will, conduct my business as an investment advisor. If anyone can give themselves one gift this holiday season, it would be to take a moment to know whether your investment relationship is that of a salesman and a customer or that of a fiduciary and a lifelong client.

For a complimentary portfolio analysis and an opportunity to meet with me to discuss your investment options please contact Timothy Bock at Summit Portfolio Management at This email address is being protected from spambots. You need JavaScript enabled to view it. or call us at (702) 838-9999.