Client-first advice is the only advice that counts.
St. Joseph, Missouri (PRWEB) September 17, 2015
Billions of dollars are at stake every year as Americans receive conflicted advice on their investments for retirement. To combat the losses, President Barack Obama directed the Department of Labor earlier this year to raise investment advice standards for brokers in charge of retirement accounts.
The pending rule toward fiduciary responsibility may affect many commission-based investment advisors nationwide, and is designed to prevent advisors from giving investors advice that benefits them personally through sales commissions or other perks. Family Investment Center, based in St. Joseph, Mo., is already acting by highlighting what client-focused, commission-free investing means and why it’s been a cornerstone of the business since its founding.
Specifically, the rule in question is being referred to as the “conflict of interest” rule, and it mandates that brokers, insurance agents and other financial advisors act in their clients’ best interest. The proposed rule was issued in April, and Department of Labor officials have analyzed more than 500 comments, which were discussed in hearings in early August.
Dan Danford, CEO and founder of Family Investment Center, said he is confused as to why brokerage and insurance firms would try to fight the proposed fiduciary rule, especially considering the rule puts the customer first.
“We support the fiduciary rule,” Danford said. “It’s been a powerful differentiator for our business since 1998. Family Investment Center has always placed our clients first. Frankly, I don’t understand any business model that doesn’t.”
Danford said there are many good brokers and agents who have no problem adhering to the fiduciary rule, but the problem is that there are some who do. Corporate liability has to be taken into account when one of these misguided brokers or agents goes outside the rules.
“Client-first advice is the only advice that counts,” he continued. “If the advice someone offers is influenced by a sales commission, that isn’t advice at all. It’s a sales pitch. Everyone knows that, and that is why they call investment salespeople consultants or advisers or representatives.”
Danford, who is a Certified Financial Planner (CFP®) and also has a marketing degree, has no problem with people selling various products and services for a living, but recognizes that not everyone is honest. He admonishes investment consultants, advisors and representatives who pretend to be objective when they aren’t.
The pending rule follows a recent White House report outlining facts about conflicted investment advice, and in support of fee-only investment advisors. The report, “The Effects of Conflicted Investment Advice on Retirement Savings,” released in February 2015, says that advisors who charge a commission on products they recommend to their clients are a “threat” to Americans, costing them thousands of dollars.
It also notes that conflicted advice lowers the returns on investments and that retirees who have gone to advisors that call themselves “fee-based” are putting themselves at risk for conflicted advice. People who get conflicted advice could see a 12 percent loss in potential growth in their IRAs over a 30-year period, according to the report. These advisors are not always losing money for their clients, but the report shows conflicted advice leads to far less productivity than taking guidance from non-conflicted advisors.
“The way to succeed is pretty simple. Don’t trick people into buying,” Danford says. “Be transparent and honest.”
About Dan Danford and Family Investment Center
Dan Danford serves as Founder/CEO of Family Investment Center, a full-service, commission-free investment advisory firm. Based in St. Joseph, Mo., Family Investment Center also serves clients in the Kansas City Northland area and across the country. Solutions for clients include investment advisory services, retirement planning, investing for women and Social Security analysis. Danford’s expertise has been highlighted in top media publications including Forbes, Mint.com, The Wall Street Journal, US News & World Report, Medical Economics, Yahoo Finance, Business Week, New York Times and ABC News. For more information, visit http://www.familyinvestmentcenter.com.