Fiduciary Update: Committee Proposed

As Congress reconvenes to discuss financial regulation, it seems that language which would reform the standard by which brokers make decisions for their clients is off the table. Instead, a committee is proposed to determine whether the “fiduciary standard” should be applied to brokerage firms (The Wall St. Journal, 2010). This standard, already held by investment advisors such as Fogel Neale Wealth Management, dictates that any real or potential conflict of interest between advisor and client must be avoided, eliminated, or disclosed.

Currently brokers have to maintain only a “suitability standard,” in that investments made for a client’s account are suitable to that client’s objectives and risk tolerance. However, suitable investments are not necessarily optimal ones. Inherently, the brokerage model relies on brokers selling certain products to their clients. Brokers are encouraged to sell certain products over others, and when faced with two suitable investments, the broker is incentivized to select the one aligned with their best interests.

We say that the customer and their advisor should always be sitting on the same side of the table. Don’t you want the interests of the person managing your money to be the same as your own?

- Philip Fogel 

Fogel Neale Wealth Management, LLC

The information and opinions in this communication were prepared or are disseminated by Fogel Neale Partners LLC and/or its affiliate: Fogel Neale Wealth Management, LLC (together, “Fogel Neale”). This communication is not an offer to buy or sell any security or to participate in any trading strategy. Under no circumstance should this message be construed as providing individually tailored investment advice. Fogel Neale recommends that investors independently evaluate particular investments and strategies. Sources: The Wall St. Journal. (2010, April 23). The Financial Bill as It Stands in the Senate . The Wall St. Journal , p. A4.