What does my teenage son have to do with the new fiduciary rule?
Hear me out. My son Joshua is awesome. He's smart, handsome, kind to others and fun to be around.
But Josh is 17 years old. Sometimes, I deal with flawed logic on his part. That's where the new rule comes in: I see parallels between those flaws and arguments being used to oppose fiduciary standards.
Try this quick quiz:
1. Josh told us he would clean his room before heading to a friend’s house one Saturday afternoon. He left without doing that. We reacted by:
1. Complying dutifully and without complaint.
2. Arguing vociferously about the unfairness of such a thing.
3. Ignoring the curfew and coming home whenever he wanted, prompting more arguments.
2. Teenagers can be night owls, but staying out too late is not always a good idea to start the school year, we imposed a curfew. Josh reacted to this by:
1. Complying dutifully and without complaint.
2. Arguing vociferously about the unfairness of such a thing.
3. Ignoring the curfew and coming home whenever he wanted, prompting more arguments.
THE RIGHT ANSWERS
For the first question, the answer of course is, “Holding him accountable.” Cleaning the room is his responsibility. Having anyone else clean it doesn’t make any sense, especially since he represented to us that he would clean the room.
It is inherently wrong to say you will do something and not do it. I see nothing controversial about this logic. It's really not that complicated.
The anti-fiduciary lobby apparently thinks so. If they were in charge of the situation, Josh’s messy room would have been ignored.
Brokerage firms, insurance companies and other financial institutions love to tout their salespeople as advisors, but they recoil at the accountability that should come with giving advice. Should their advice be questioned, they will likely deny giving any advice at all.
One common defense is that services provided were brokerage, not advisory. Another is the advisor was acting as an agent of the insurance company so it is up to the client to decide whether to buy the policy suggested. I might find those defenses acceptable if it were not for how the relationship was marketed to the public.
RESPONSIBILITY
Ever see a financial firm ad that identifies their salespeople as salespeople? No? Neither have I.
If you don’t want the responsibility of being an advisor, don’t call yourself an advisor or imply you are one.
That may seem harsh, but the second quiz question gives us some insight into why I don’t think it is any more complicated than that. The correct answer is: "Complying dutifully and without complaint."
Josh has had no issues with curfew because being required to do something he was already doing is not a burden in any way.
If the anti-fiduciary lobby were already adequately disclosing costs, eliminating compensation practices that work against consumer interest or holding themselves accountable to serving clients’ best interests, they would not need to be protesting the adoption of rules that require them.
IT'S NOT COMPLICATED
The public wants advisors to actually be advisors — give advice and be accountable for it. It is not complicated. The anti-fiduciary lobby cites many complicating factors but those are just complications for them, not the public.
As a parent, when the logic behind one of my kids’ explanations is ridiculous, I don’t accept their excuses. The public, regulators and true professional advisors shouldn’t accept any either.
Dan Moisand is a financial planner and principal at Moisand Fitzgerald Tamayo in Orlando, Fla. Moisand is a former president of the Financial Planning Association.
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