Fiduciary

A fiduciary is legally obligated to act in the best interest of the person or entity they are representing. In other words, they have a fiduciary duty or obligation to their client. In the world of financial advisors, only independent Registered Investment Advisors have fiduciary responsibility.

John Bogle on Fiduciary Duty and Other People's Money

John Bogle calls for regulatory reform to the investment business in a recent speech at the Roxbury Latin School. Bogle calls for federal laws that would demand fiduciary roles for investment managers: "The stock market casino has become a giant—and costly—distraction to the serious business of investing . Greed, recklessness, and self-interest ride in the saddle of today’s capitalism, and it is high time we undertake the necessary reform, with federal laws that demand the return of fiduciary...
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Financial Advisor Views on Annuities Appear Tightly Related to Business Models

A recent study from Cerulli Associates indicates that registered investment advisors (RIA) are more than hesitant to recommend annuities to their clients.

The report surveys and compares the views of various forms of financial advisors.  Not surprisingly, financial advisors’ product views are tightly related to the financial incentives that support their business models.  Consider, for example, the following:

  1. Only 7% of insurance company representatives would be reluctant
  2. ...
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View Retirement Planning Calculators with a Heavy Dose of Skepticism

Consumers and financial advisors are encouraged to view retirement planning calculators and software as useful but limited tools. Consider, for example: All models are based on assumptions, so poor assumptions can lead to faulty results and decisions. Any model result is probabilistic. In other words, there is no certainty with the output. Be conservative when assessing the validity and likelihood of results. Hire a fiduciary as your "pilot." The person driving the model results should have...
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Equity-Indexed Annuities Can be a Shell Game for Consumers

The first time I visited New York I was taken in a sidewalk shell-game within 45 minutes of being in the city—no kidding.  Shell games involve trying to guess where a card or any other item might reside after being shuffled among various covers by a dealer.

There are basically three reasons why I lost $40 within 45 minutes of arriving in NYC: 1) I was naïve; 2) I was overconfident in my card-spotting abilities, and; 3) there was a large amount of asymmetric information—in other words, the “dealers” (to use a polite term) had a heck of...

Battle Lines Being Drawn Over Fiduciary Status of Financial Advisors

There is a key point of distinction that exists in the world of financial advice and vast majority of people are unaware that it exists. 

The defining issue is whether a...

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