One MIT professor put it to the test, and here’s what she found:
“A majority of these (financial experts who advise people on their retirement savings) are not registered as financial advisers who have a fiduciary responsibility to their clients, which means putting their clients’ interest first.”
“Instead, they are registered as brokers who only adhere to what is known as a “suitability” standard, which is much vaguer and only asks brokers to make recommendations that are consistent with the client’s interest.”
“We found that advisers who have a fiduciary responsibility toward their clients provided better and less biased advice than those that were merely registered as brokers.”
Antoinette Schoar, professor of entrepreneurial finance and chair of the finance department at the MIT Sloan School of Management, “We Put Financial Advisers to the Test–and They Failed,” The Wall Street Journal, November 7, 2016
The Takeway: If planning for your future is important to you, don’t leave the important decisions to someone who doesn’t put your interests first. Make sure your financial advisor is a fiduciary and has a legal duty to do right by you. Brokers are not held to the same legal standard. Our firm, and our advisors, are fiduciaries, always have been, and always will be.