Financial advisors, more accustomed to fielding questions about fees or the stock market outlook from prospective clients, should get ready to also answer queries about best interest or suitability standards. This is, if state regulators and AARP have anything to say about it.
The North American Securities Administrators Association, together with AARP, the advocacy organization for Americans 50 or older, recently published an online tool called
The questions include clarification of advisors’ licenses, compensation, services and products, along with whether any regulators have disciplined them. Public databases already make
The website follows
“While [RIAs] serve as fiduciaries who are required to provide advice that is in their clients’ best interest, many other financial advisors operate under different requirements that obligate them only to make recommendations that are ‘suitable,’” Jean Setzfand, senior vice president for programs, said in a statement. “AARP’s new interactive guide will help investors avoid confusion about a financial professional’s standards and qualifications.”
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The tool stops short of suggesting clients avoid non-fiduciaries, noting in a disclaimer that AARP is not providing advice nor promoting any individual planners. The choice of advisor “is a personal decision that should made after careful consideration of your individual financial situation,” the disclaimer says.
In that vein, the website gives identical “successfully submitted” messages in response to users who select either “best interests” or “suitability” in a section of the interview on the standards. It also refrains from correcting wrong answers, such as a “yes” to whether investment returns are guaranteed.
The organization has planned “enhancements to provide more educational guideposts” through the website, Setzfand wrote in an email. The tool would have been as valid for clients before the fiduciary rule as it is in the present, and the two organizations don't necessarily see the fiduciary question as a dealbreaker, she says.
“AARP and NASAA do not make any recommendations about who to do business with,” Setzfand says. “Our purpose with the Interview an Advisor tool is to help educate investors about how different advisors are compensated and the varying standards of care they are legally required to provide clients.”
Advice in clients’ best interests does loom large to them. Nearly three quarters of adults who have or have had retirement accounts said it’s “very important” for advisors to act in clients’ best interests, according to an independent
The fiduciary rule received 91% support in the same poll. In contrast, advisors, their firms and industry organizations have
Half of employee advisors
