Fiduciary Status

A person with fiduciary status is legally required to act in the best interests of their client. Fiduciary status requires that the financial advisor is prohibited from engaging in transactions that may involve a conflict of interest, as client interests have to come first. In the current financial environment, only Registered Investment Advisors (RIAs) have fiduciary status. Recent proposals by the Department of Labor to extend fiduciary status to other types of financial advisors such as stockbrokers or registered reps have been delayed. Revised proposals due in early 2012 may extend fiduciary status to broker-dealers and the broader financial advisor community.

Survey Reveals High Levels of Confusion about Fiduciary Status

A survey conducted this past August confirms that consumers are confused by the different standards that apply to various types of financial advisors. 76 percent of the 1,319 survey respondents mistakenly believe that brokers are required to act as fiduciaries and serve the best interests of their clients.
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Veritat Offers Comprehensive, Fee-Only Financial Planning Services that are Affordable and Scalable

Veritat is a start-up seeking to leverage process and technology innovation to scale a business model that is typically saddled with persistent and burdensome variable costs.  If successful, Veritat will be able to deliver premium services to a mass audience.

As a registered investment advisor (RIA) that adheres to the fiduciary standard, Veritat provides comprehensive financial planning services through financial advisors who are employed by the company and share a common sense of mission.

We spoke with Dr. Kent Smetters who is the President of Veritat and a professor at the Wharton School at the University of Pennsylvania. 


Annuity Digest: How did Veritat come into existence?

Dr. Kent Smetters:...


Fiduciary Standard Receives a Boost from the Goldman Fiasco

The recent hearings on Capitol Hill involving Goldman Sachs and other financial institutions seems to have breathed life into the broad incorporation of fiduciary status within the investment industry. A pair of senators recently proposed to restore fiduciary language into the Wall Street Transparency and Accountability Act of 2010.

Keeping an Eye on Fiduciary Status

The proposed regulation that could expand fiduciary status to a broader set of financial advisors appears to be pending in Congress.

The Dodd version from the Senate Banking Committee would potentially extend fiduciary status to broker-dealers and registered representatives.  Broker-dealers are currently exempt from the Investment Advisers Act which defines fiduciary status.

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House Bill Would Apply Fiduciary Status to Annuity Sales

The House Financial Services Committee passed the Investor Protection Act of 2009. This legislation would have a meaningful impact on the sales of annuities and mutual funds as the current suitability standard would be replaced by a much higher fiduciary standard. The net effect would be a big win for financial services consumers. Currently, suitability standards require that financial advisors determine whether a product is appropriate for a given client profile, with risk tolerance as one of...