Tom and I have used a doctor-advisor analogy before to explain the confusing topic of dual-registration. We wondered how people would feel if they went to their doctor and were prescribed medication, only to find out afterwards that their doctor was also employed as a pharmaceutical sales rep who received a commission for selling said medication. We explained that this doesn’t happen because doctors are held to a certain standard. That type of behavior isn’t tolerated.
Today I read a great post from Cullen Roche of Orcam Financial. Cullen weighed in the uniform fiduciary standard debate that’s been receiving increased attention recently. His thoughts can be summarized in this sentence:
“Personally, I think we should start thinking of financial advisors as being something more like personal financial doctors.”
To that I say, amen. Cullen goes on to explain his reasoning for this stance, which I highly recommend checking out (link below).
Holding anyone who gives financial advice to a strict fiduciary duty is definitely an excellent idea. Unfortunately, that’s not how things are conducted at the present moment. Another proposed solution to this issue has been to clearly separate the brokerage and investment advisory industries. Not allowing the brokerage industry to create convoluted titles for themselves would be a step in the right direction. Depending on how you are registered, you would either be a broker or an investment advisor. No financial advisers, investment consultants, wealth managers, etc. The end goal would be to clearly define the lines so that the average person can tell whether they’re being pitched or given unbiased financial advice.