For several years, the Financial Planning Coalition has been urging the government to regulate financial planning as a profession, with a requirement that anyone who provides financial planning should adhere to specific competency standards and the fiduciary standard of care. The Coalition consists of the Certified Financial Planner Board of Standards (CFP Board), the Financial Planning Association (FPA), and the National Association of Personal Financial Planners (NAPFA).
The president is now advocating such changes. A couple of weeks ago, USA Today ran a front-page article titled ‘Bad Advice’ Costs Billions. It discusses the administration’s efforts to require all financial advisors to put their clients’ interests above their own, especially when it comes to retirement savings plans. This means that if there were two similar funds, the new rule would require an advisor to recommend the fund with lower fees and commissions.
President Obama recently remarked that “there are a lot of very fine financial advisors out there, but there are also financial advisors who receive backdoor payments or hidden fees for steering people into bad retirement investments that have high fees and low returns.” This can cost a typical investor about 1% of returns per year. That can reduce your savings by more than 25% over 35 years. Collectively, this bad advice is costing Americans as much as $17 billion a year!
The U.K. outlawed commissions on financial transactions for retail investors in 2010. Nonetheless, some members of congress and industry lobbyists are already resisting this change. Fortunately there’s already a group of financial advisors who voluntarily commit to the policy of placing your interests above their own. They’re called Fee-Only advisors and Guidepost Financial Planning is proud to be one of them. Please visit our website or give us a call at 970.419.8212 so that we can discuss your financial goals in a no-charge, no-obligation initial meeting.
This article is for informational purposes only. This website does not provide tax or investment advice, nor is it an offer or solicitation of any kind to buy or sell any investment products. Please consult your tax or investment advisor for specific advice.