You Should Fire Your Financial Adviser If They Are Not a Fiduciary
Big Brother is watching. No, I am not talking about Big Brother from the George Orwell novel “1984,” or the reality TV show filming the lives of strangers living together 24/7.
My sister and I are one day shy of being exactly three years apart from one another. June birthdays are great, by the way. They usually coincided with the end of the school year and that was awesome. So basically its been my job (for as long as I can remember, anyways) to look out for her, just like a big brother should.
Looking back on it, I’m sure there were times that yes, I deserved the “eye-roll” or some other form of disapproval.
Heck, during the year we were in the same high school together, I had to make sure to bring my “Big Brother A-game” every day. There were people she needed to stay away from (all boys), teachers to connect with (Herm), and lessons of my mistakes to learn from (take the free college courses). Big brother knows best!
I’d like to think that she took every piece of my advice, or the “wisdom” I shared with her to help her be as successful as she is.
I’m kidding, of course. I tease her about it every now and then that I showed her all the things not to do. But she really has been successful, all in her own right and I’m a proud big brother because of that.
A lot of those same big brother tendencies have followed me into my profession. For example, helping people build wealth by making sure they have an advocate on their side of the table that is willing to take responsibility for their guidance and do what is best for the client.
It’s offensive to me when I see or hear stories about people not being treated with respect or being taken advantage of by someone else calling themselves a “financial adviser.”
For example, I recently came into a situation where some people were sold a product they didn’t need and that was certainly not in their best interest.
Since I didn’t know much about the specific product, I had to do a little research.
After some time, I found this little nugget, buried deep in the “legalese” (what is called the “prospectus”) of that product. Read the statement below and answer this question, “Does this sound right to you?”
“To inform yourself of any potential conflicts of interest, ask your financial adviser before you buy how the selling firm and its financial advisers are being compensated and the amount of the compensation that each will receive if you buy the contract.”
“What??” “Huh?” “No, absolutely not.” & “WTF, mate?” are all acceptable answers because it doesn’t sound right to me either.
What this firm is basically saying, is this:
“Hey, we know that this might not look so great – I guess you could say we have the foxes watching the hen house here – paying salespeople a boatload in commissions on this complex stuff we sell with high expenses. But if you don’t bring it up, that’s on you, not us. We gave you this document and you should have known to read it…don’t blame us.”
You don’t know what you don’t know. This is especially true with topics that are either unfamiliar, complex, or flat out boring (I am a bit of a nerd though).
That being said, companies that are in opposition of the new fiduciary rule that is being put in place, rely on what you don’t know.
*gasp* Financial advice to be required to be in a clients best interest? The horror! *gasp*
Using some of my big brother wisdom here, if you’re working with a “financial adviser” that isn’t a fiduciary, that “adviser” may be able to use a disclosure statement similar to the one above exempting their fiduciary duty – fire them immediately and start working with a fiduciary as soon as you can, you wont regret it.
Here are two resources you can use to find one in your area:
Thoughts on the topic? Feel free to discuss and share!