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By Bob Moeller
WEAC Member Benefits
May 2007
Financial
Planning Seminars
Achieving
Financial Independence
"I don’t know who to trust” or “I’m not sure if this investment is a good one or not.”
Members are wise to question anyone trying to sell them investments because there is a lot of bad advice being given, and a lot of awful investment products being sold by salespeople quite willing to lie in order to get a quick commission or high fees. Frequently these salespeople will have a few initials after their name to impress you.
A couple of good things happened recently that will benefit the consumer. First the Certified Financial Planners (CFP) Board has put up for consideration by members the proposal that CFP’s “shall at all times place the interests of the client ahead of his or her own.” This is true even if the CFP doesn’t offer financial planning services. If the CFP does offer financial planning services, his or her responsibility changes from “act in the interests of the client” to an obligation to provide the “duty care of a fiduciary.”
Then they define fiduciary as “one who acts in utmost good faith, in a manner he or she reasonably believes to be in the best interests of the client.” The term “fiduciary responsibility” is a potent deterrent to the sale of bad products. If all financial salespeople had fiduciary responsibility, many of the products that members now own would never have been sold to them.
I am a CFP and I’m proud that the CFP Board is putting it that bluntly. I am also a Registered Investment Adviser (RIA), and all RIAs are obligated to take fiduciary responsibility.
I recommend that you request the following statement in writing, on letterhead, signed from anyone who wants you to purchase an investment product or services: “I am marketing financial services or products. I am accepting fiduciary responsibility for my recommendations and am committed to acting in utmost good faith in a manner I believe to reasonably be in your best interests.” If they make excuses, don’t buy.
WEAC member benefits include discounted summer fun activities
WEAC Member Benefits and NEA Member Benefits offer an array of services and programs. Following is a summary of some of the most popular benefits, beginning with seasonal discount arrangements with Wisconsin attractions:
Some of the other benefits available to WEAC members include:
Putting the interests of clients first
The Investment Advisers Act of 1940 set forth fiduciary responsibilities for investment advisers.The SEC decided in 1999 that certain broker-dealers (stockbrokerage firms) would be exempt from these rules. Of course, more and more brokers were getting involved in financial advice and account management, rather than just selling stock. This exemption became known as the Merrill Lynch rule.
The Financial Planners Associa-tion (FPA) believed that brokers should not be exempt from the fiduciary requirements of the law, so they sued in 2004. On March 30, 2007, an appellate court agreed. Essentially, the FPA argued that stock brokers should not be able to offer the same advisory services as Registered Investment Advisers (see article) without requiring brokers to put their client’s interests first.
I have been critical of life insurance agents but there are stockbrokers who sell trash for a quick profit too. This court decision should benefit investors everywhere.
Posted May 29, 2007