I read an interesting article from rep.com this morning (full article here). In case you wondered, other people who are not fiduciaries include, but are not limited to: my dentist, my plumber, and the drive-thru worker who asks if I want to supersize my combo meal. It doesn’t mean they are bad people (in fact, I’m more than happy with their service), they just aren’t required to put my interests first. Excerpt below:
But there is still a lot of confusion about who is actually held to a fiduciary standard, the survey found. Three out of five U.S. investors think insurance agents do. Two out of three U.S. investors think stockbrokers do. And 76 percent of investors think that all financial advisors (a term used to describe brokerage firm salespeople) do. Meanwhile, 75 percent think that financial planners are held to a fiduciary standard and 77 percent say investment advisers are.
Only 29% understand that the primary function of stockbrokers is to buy and sell investments to clients, and only present limited advice.
So, here are some questions to ask an advisor, insurance agent, dentist, or drive-thru worker (in that order): How and what are you paid in our relationship? Are you required by law or oath to put my interests first? Do I really need a tooth-colored crown on a tooth that only my spouse will see? Take a look at me, do you really think I should supersize my combo?