What’s in your best interest is typically of no concern to your “financial advisor.” In fact, congress wants to force advisors to put their customers’ best interest first but the industry is fighting it tooth and nail:
While most of the debate about financial overhaul legislation has focused on the impact on how big banks do business, one piece that would affect consumers directly has received little public notice: a requirement that stock and insurance brokers act in their customers’ best interest.
And that provision may not make it into the final overhaul plan.
The insurance industry, in particular, has been fighting the requirement…
At issue is whether brokers should be required to put their clients’ interest first — what is known as fiduciary duty. The professionals known as investment advisers already hold to that standard. But brokers at firms like Merrill Lynch and Morgan Stanley Smith Barney, or those who sell variable annuities, are often held to a lesser standard, one that requires them only to steer their clients to investments that are considered “suitable.” Those investments may be lucrative for the broker at the clients’ expense. This is why it is important to compare annuities that are on offer from other companies so you get the best deal for you. As it’s your money you’re investing you are going to want to ensure it’s in the right hands. If you’re based in Canada and looking for advisers then you could have a look into Financial Advisors Edmonton.
Over the years, it has become more difficult for consumers to understand where their advisers’ loyalties lie, especially as the traditional stock-peddling brokers have started to look and act more like financial advisers…
…the insurance industry was “apoplectic because if they sell a variable annuity and they are subject to fiduciary duty, that means they will probably have to fully disclose the compensation they are getting.” This, he added, “would make clear the excessive incentives they have to mis-sell the variable annuity, which has been the cause of regulatory problems in that area.”
I highly recommend reading the whole article. It only begins, however, to lift the veil on the retail investment industry. For more information about the perils of investing with an “advisor” read the February issue of “The Felder Report.”