DOL Fiduciary Rule: Brokerage Industry Shows Its True Colors

The Consumer Federation of America is an association of non-profit consumer organizations established in 1968 to advance consumer interest through research, advocacy, and education.  On January 18th, 2017 the Consumer Federation of America published a report titled “Financial Advisor or Investment Salesperson?”  This is truly disgusting…you can read the report here.



The report exposes how major broker-dealers and insurance firms present their services to the public (marketing & advertising) and how they describe those same services in their legal challenge versus the U.S. Department of Labor.  Bait & switch, 180, two-faced, whatever you want to call it.  It’s all here!


The below language is within the report and pulled directly from the company websites…here are a few examples (see if your investment provider is listed in the report):


Edward Jones.The Edward Jones website features the following statement: “Our goal is to provide advice and guidance based on your needs. We have more than 13,000 financial advisors in the U.S. – each one dedicated to doing what’s right for our clients.”


Raymond James.Raymond James promises to conduct itself in accordance with several precepts, the first of which – and the only one in bold – is that: “Our clients always come first.”


Ameriprise.In advertising how well-credentialed Ameriprise Financial advisors are, the firm states, “Ameriprise advisors are dedicated to doing what’s right for their clients.”


Northwestern Mutual.The firm’s “Values” webpage declares: “Above all, we believe in doing what’s right for our clients. With every important decision, we ask ourselves this poignant question: “Is this in the best long-term interest of our clients?”


This is what they’re saying in court to prove they are NOT Fiduciaries:


The industry’s legal challenge is based on the claim that they are mere salespeople engaged in an arm’s length sales relationship with their customers.  That’s right, the establishment is trying to prove they should not act in the best interest of their clients because they are salespeople.


This is misrepresentation at best and complete fraud at worst.  Potential investors are led to believe their financial advisor, financial planner, insurance agent, etc. are acting in their best interest.  If the financial services industry is making the legal case their associates are salespeople, then their marketing practices are grossly deceptive.  Regulators should clearly make a distinction between fiduciary investment professionals and salespeople.  Investors need to have a clear understanding of what type of relationship they are entering. 


We have put together a list of the special interest groups suing the Department of Labor (see links below).  You can see the member firms that make up each group in the links below.  If your current financial services provider or insurance company is listed, you might want to reevaluate the relationship.


http://www.sifma.org/member-directory/


http://www.financialservices.org/litigateDOL/


http://fsroundtable.org/members/


https://avectra.myirionline.org/eweb/dynamicpage.aspx?webcode=ODSRP


https://www.acli.com/About-ACLI/Membership/Member-List


http://www.naifa.org/membership/corporate-support


As an investment professional, this level of deceit puts a black eye on the entire industry.  It also validates our decision to launch Pure Portfolios to expose those that work against clients and promote higher ethical & professional standard within wealth management.  


Full Disclosure:  We have a custodial relationship with Charles Schwab. Schwab is a large, publicly traded investment manager with several business divisions.  In our opinion, their retail business would benefit from scrapping the Fiduciary Rule (less compliance costs and reduced litigation liability).  Schwab’s RIA business (which Pure Portfolios would fall under) would benefit by providing investment advice that adheres to the Fiduciary Standard. 


You can read more about Pure Portfolios stance on the Fiduciary Rule here.

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