This week I returned a call to a financial advisor who left a voice mail asking a question about ETF.com.
A strange thing then happened. He was not there to answer and it went to voice mail; however, I could not leave a message—as he had done with me—because his voice mail was “full”… at 9 am.
Normally I wouldn’t have thought twice, but I put myself in the place of one of his clients, looking to speak with the person at 9 a.m. who manages his or her money.
As I hung up, a huge red flag went up in my mind. How could a financial advisor have so many voice mails that a client would not be able to leave a message … early in the morning. You would think allowing a client to leave a message would be the least an advisor could do, whether or not they return the call.
No Shortage Of ‘Lip Service’
This got me thinking about “lip service,” which we all know is in no short supply in financial circles.
Advisors frequently talk about putting their clients’ interest first, yet the Obama administration is attempting to impose a fiduciary standard on advisors that would require an advisor to put a client’s interest first, something most investors just assume is the case. Those attempts are being met with opposition.
It should seem like a slam dunk, right? It’s hard to fathom an advisor publicly complaining about putting their clients’ interest first. But behind closed doors, there’s a lot of complaining.
According to InsuranceNewsNet.com, appropriations bills that call for stopping the Obama administration from creating a new fiduciary standard are moving forward in the House and Senate. Hmm. Now who would be pushing lawmakers to stop regulations putting a client’s interest first? Advisors and money managers, of course.
Not In The Client’s Interest?
The proposals are aimed at “restraining regulatory overreach by the administration,” as stated by the Senate Appropriations Subcommittee that deals with the Department of Labor, which is leading the fiduciary-standard charge.
The report from InsuranceNewsNet.com contained this beauty of a quote: “The rule as currently proposed is unworkable for advisors and their clients,” said National Association of Insurance and Financial Advisors President Juli McNeely.
That’s right, according to McNeely, it is not in the client’s interest for an advisor to put that client’s interest first. Apparently, she said that with a straight face.
Surely I will be accused of missing some nuance or not understanding “the way it works.” But if advisors want to stem the tide of young investors flocking to robo advisors like Betterment and Wealthfront, which both pledge to put their clients’ interests first, then big wealth management firms should do the same proactively.
It shouldn’t require a law to put the client’s interest first—or listen to voice mails.
Drew Voros is editor-in-chief of ETF.com.