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.
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:...
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.
