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Fiduciary Rule – please come back!


Why Should You Stick with an Advisor who Offers the Fiduciary Standard of Care?

What has me writing today, is something I heard on Dave Ramsey’s radio program.  It hammers home why you want to be with an advisor who sticks to the Fiduciary Standard of care. (vs the Suitability Standard you will encounter at a broker/dealer.)

Dave Ramsey told a caller to put the minimum into a government sponsored Passive S&P500 fund (just to get the government match), then take whatever was left and try to beat the S&P500.  What?  This investor was not a market pro – a real beginner calling into a show to get good advice. Crazy as that is, it gets worse…..he tells the caller to visit his smartvestor listing of pre-approved brokers who will help you choose a fund to beat the S&P500!

Wow.  Just wow.  I think 90% of what he says is good advice, but when it comes down to recommending a poor solution for the investor – he is just like all the others.  Making $$ sure can compromise your ethics.  He knows beating the S&P500 is a daunting task and that tons of research has been done on the topic.  He chooses to ignore the evidence and recommends a solution that puts $$ in his pocket.  To heck with the outcome the caller will get – as long as it is “suitable” what he has done is legal.  He is aware a better solution exists, but will not recommend it.  Legal responsibility upheld, ethical responsibility………..

Unfortunately things will not get better for “Joe Average” anytime soon.  We have a roaring bull market, and a government bent on dismantling anything done over the past decade.  Bringing the Fiduciary Standard to greater swathes of the general population seems dead in the water.  Lets hope we do not lose what we have.  Come back Fiduciary Standrad, come back…….

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About the Author

Kent Fisher is a Chapel Hill, NC Fee-Only Comprehensive Wealth Manager at the Southern Investment Management Collective (SIMC).  SIMC provides comprehensive financial planning, retirement planning and investment management services to help clients organize, grow and protect their assets.  SIMC serves clients as a fiduciary, and tailors all solutions to each client's unique situation.