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Is your financial advisor on your side?

It's time to revisit the idea that the person who manages your money needs to put your best interests first. The Fiduciary Rule says that your advisor must find you the best investment deal, not the one that makes him/her the most money. Of course the financial industry is fighting back saying that advisors must be able to select investments from a wider universe of choices. They argue that it's not unlike going to a restaurant and only being able to choose food that's good for you. If you want to eat something that's artery-clogging you should be able to decide... or in this case, let the restaurant decide for you!

The hypocrisy is obvious. These people need to make a living, which is fair, but you trust them to do what's best for you. A better analogy is your doctor. The Hippocratic Oath says 'first, do no harm.' But that's just a starting point. It doesn't say, 'then make as much money as you can by subjecting your patient to unnecessary and costly tests and procedures.' Brokers and advisors who are not fiduciaries are free to use the less stringent "appropriateness" level of service. So while it may be appropriate for you to own an index fund (which is generally very cheap) your broker or advisor can find an expensive one for you that kicks back a payment to him/her.

The Fiduciary Rule is not fully in place and the industry is fighting back. The current administration in Washington is open to weakening the Rule's provisions. So now it's up to you. Demand that anyone managing your money acts as a fiduciary and states that they are in writing.

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