New financial bill lacks fiduciary standard

Brent Hunsberger’s column in this weekend’s Sunday Oregonian touched on the fact that the new financial overhaul bill fails in implementing the fiduciary standard of care for money managers.  It also talks about the CFP(R) designation for which I just completed my exam (Brent and I were classmates at University of Portland).  Here are a couple excerpts:

  • “The problem is that the finance industry has blurred the lines between those whose main duty is to watch out for their client’s best interest and those who make more money selling you products for a profit.”
  • “Traditional broker-dealers instead abide by a “suitability standard.” They have to make sure the product they sell is appropriate for a client’s investment needs and timeline. It’s the same bar that insurance sales agents must keep when selling equity indexed annuities, which are invested in securities.”
  • “The standard is much different for registered investment advisers and certified financial planners. They’ve pledged, through licensing or certification, to put their clients’ economic interests before their own.”
  • “Days before Obama signed the historic bill, I joined about 1,900 people across the nation in taking the certified financial planner certification exam.  It was brutal.  For nearly a year, 11 of us — all very capable students — studied together through the University of Portland for the test, learning basics about the tax code, estate law, retirement plans and time value of money. I even took six weeks off work to gear up for it.  But Saturday, after 10 hours and 285 questions, we emerged drained, with little feeling for whether we’d passed. We won’t know until Labor Day. (Historically, the pass rate is 56 percent.)”

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