Expert: Obama's Wall Street Crackdown a Game-Changer for Middle Class Americans
February 26, 2015
This leads to a requirement that all retirement advisers be held to the fiduciary
standard, which essentially requires them to put their clients' financial interests
before their own.
President Obama announced this week that the Department of Labor will “crack down
on Wall Street,” leading to a requirement that all retirement advisers be held to
the fiduciary standard, which essentially requires them to put their clients' financial
interests before their own. This proposed change could save Americans who use an adviser
for retirement investments thousands of dollars in the course of their working lives.
Harold Evensky is a certified financial planner (CFP) and professor of practice in
Texas Tech University's nationally recognized Department of Personal Financial Planning. He is chairman of Evensky & Katz/Foldes Financial Wealth Management in Miami and
is on the Committee for the Fiduciary Standard, which has been working for this change.
He has been chairman of the CFP Board of Governors and a member of the International
CFP Council, TIAA-CREF Institute Investment Advisory Board, IAFP National Board and
has been published in multiple financial planning journals.
Harold Evensky, personal financial planning professor, (806) 834-5042 or HEvensky@ek-ff.com.
- Most investors believe regulations require their retirement adviser to put their best
interests in mind, but this isn't always true. Investment advisers are required to
place the client's interests first and eliminate possible conflicts of interest, according
to the Investment Advisor Act of 1940.
- Brokers, however, are monitored by the Financial Industry Regulatory Authority (FINRA),
an independent securities regulator. FINRA requires only that the broker-dealer reasonably
believes any recommendations made are suitable for the client and his specific situation.
Often the difference isn't clear to average investors.
- The debate in Washington centers around holding all retirement advisers, whether brokers
or investment advisers, to the same standards: appropriately handling possible conflicts
of interest and putting investors' interests first. President Obama's direction to
the Labor Department would do this.
- “Many investors believe all brokers and advisers are required to place the investor's
interest first. That's not always the case.”
- “There's an important distinction in terms of loyalty; a broker's loyalty is actually
to the broker-dealer he works for, not necessarily the client.”
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