The initiative, led by personal financial planning professor John Gilliam, will examine consumers’ and advisers’ perspectives on what “best interest” means according to a new rule affecting financial advisers.
A consumer rights advocacy organization is joining a Texas Tech University professor in his goal of determining what the federal government means in a new law that may change how financial planners interact with their clients.
John Gilliam, an associate professor of personal financial planning and director of the newly formed Best Interest Initiative, announced Americans for Annuity Protection (AAP) will be a strategic partner for the initiative. He worked with other financial services professionals to create the initiative after the U.S. Department of Labor approved the fiduciary rule, which requires financial planners to act in their clients' best interests. The rule does not define best interest, however, leaving advisers wondering how to give advice and be compensated fairly without violating the rule.
“The research will help the industry formulate and define ‘best practices' and ‘reasonable compensation' under these important new parameters on financial advisers and, in turn, guide adviser behavior,” he said.
AAP, a nonprofit organization that advocates for consumers' rights to an effectively regulated annuity marketplace that encourages financial independence, is the second strategic partner for the initiative. The Society of Financial Service Professionals committed to the initiative in April.
“AAP believes the financial services industry and those who regulate it will be helped by a better understanding of what it means to the consumer to be advised in their best interest and what factors are important when determining reasonable compensation,” said Paul Feldman, AAP chair and publisher of Insurance News Net Magazine. “Consumers are the most important stakeholder in a best interest standard and are better served if this intelligence comes from qualitative research rather than court precedents.”
Further strengthening this partnership, the AAP announced Gilliam was joining the organization's board of directors after a unanimous vote. Feldman said Gilliam's expertise in insurance and personal risk management will be an asset to the board as it continues to help consumers protect their income and financial legacy with annuities.