So if you've ever tried to get some help with
your finances, you know, hire someone to help
you plan for retirement or just figure out what
to do with your savings, you've probably hit
that wall of confusion. There were just so many
titles. You've got brokers, financial planners,
advisors, agents. They all sound kind of the
same. They do. But they operate under completely
different rules. Wildly different. Our mission
in this deep dive is to really cut through all
that noise. This is for you, the learner. who
really wants to know, what do these titles legally
mean? And whose interests are they actually required
to serve when they give you advice? Right. We're
going to define the roles. We're going to break
down how they get paid because, let's be honest,
following the money explains almost everything.
It really does. It's the key. And most importantly,
we're going to explore that critical legal standard,
the fiduciary duty, that determines their real
binding obligation to you. And our sources for
this are... Pretty comprehensive. We're drawing
really heavily on the official definitions and
the distinctions that U .S. regulators make about
financial advisors, about what they call registered
investment advisors or RIAs. Okay. And we're
also digging into the whole world of how they
get paid, looking at institutional fees, and
even how other countries try to tackle this exact
same problem. Let's just start with the core
problem right out of the gate because I think
it confirms that initial suspicion that a lot
of people have. Experts call the relationship
between... a client and an advisor the principal
agent problem yeah that's the finance jargon
for a classic conflict of interest that's really
baked into the system from the start the client
you you're the principal right I need guidance
you need guidance you need honest advice the
advisor is the agent who's supposed to act for
you the problem is that the agent the advisor
has information you don't And they have conflicts
of interest, like getting a bigger payout for
selling one product over another that you might
not know about. So there's an imbalance. A huge
imbalance. And it means the advice they give
might be, you know, technically OK, but it might
be designed to make them the most money, not
you. And that can lead to some really dishonest
advice or even misconduct. So knowing that conflict
is built in is, I guess, the first step to protecting
yourself. And that's why we need to know the
difference between the titles and, of course,
the paycheck. Let's jump into that structure.
OK, so at the most basic level, a financial advisor
or advisor, we'll get to the spelling, is just
a professional who gives financial services based
on your situation. Right. But financial services
is such a huge, massive umbrella. Yeah, it's
everything. Exactly. It could mean one person
is creating this huge, comprehensive life plan
for you, covering taxes, your estate, everything.
Or it could be someone whose main job is just
to sell you one thing. Like life insurance. Life
insurance or a specific type of annuity. And
that range of what they do dictates what kind
of qualifications they have to have. Now, here's
a distinction that I think really trips people
up, especially in the U .S. Advisors are generally
registered, not licensed, at least not in the
same way, say, a doctor or a lawyer is licensed.
That's a really crucial nuance because. Licensing
usually has to do with selling a specific product.
So, for example, someone might have an insurance
license that lets them sell you insurance. But
if they want to sell you something more complex,
like a variable annuity, which is legally a security,
that same licensed agent has to also pass the
Series 7 exam and be registered to sell securities.
So they're stacking credentials based on what
they're allowed to sell you. Exactly. And they
register with different regulators depending
on what they're doing. But they might still just
call themselves a financial planner. Even if
they're basically a salesperson. Correct. The
title itself doesn't have a unified legal definition,
which is a huge part of the problem we're trying
to unpack here. And, okay, you brought it up,
so let's just touch on the spelling thing. Advisor
with an O -R. Versus advisor with an E -R. It's
one of those little quirks that, you know, only
people in the regulatory world would probably
notice, but it's interesting. One textbook we
looked at suggests that advisor with an E -R
is mostly used when you're talking about the
law itself. Like the Investment Advisors Act
of 1940. Precisely. Whereas advisor with an R
is what you see more when talking about the person,
the practitioner. You wouldn't say you have an
advisory practice. You'd say you have an advisory
practice. Right. So it's a subtle split. You'll
see both, which just adds to the confusion. But
no matter how they spell it, the real truth comes
down to how they're paid. Yes. The compensation
model is everything. It reveals the entire conflict
structure. Let's break down the six main ways
they get paid, which really boil down to commissions,
fees, or some kind of mix. Let's start with the
cleanest ones, the ones with the least built
-in conflict. Number one, the hourly fee. Simple
enough. It's the purest way. You pay them for
their time and their expertise, just like you'd
hire an accountant or a consultant. Their incentive
is just to give you good advice for the time
you're paying for. And related to that is number
two. The flat fee. Yeah. A set price for a specific
project. It might be, say, $3 ,500 for them to
do an annual review of your portfolio. Or maybe
$5 ,000 for a complete written financial plan.
So they're often called flat fee advisors. They
are. And once you pay that fee, they have no
reason to try and sell you anything else. The
advice can be truly objective. Okay. Now we're
getting into the murkier territory. Let's start
with the classic brokerage model. Number three,
commission on trades. This is where the advisor
gets paid for every transaction. You know, maybe
$12 every time they buy or sell a security for
you. And the conflict there is just immediately
obvious. It's immediate and it can be disastrous.
This model actively incentivizes them to trade
as much as possible, a practice that has a name,
churning. Churning. It just sounds bad. Can you
give us a quick concrete example of what that
actually looks like for someone to count? Sure.
Imagine you have... say, $200 ,000 in a brokerage
account. If your broker decides to reposition
your portfolio every few weeks, selling some
things, buying others, those little transaction
costs start adding up incredibly fast. Even if
they seem small, like $12 a trade. Exactly. If
they move your entire portfolio around three
times in a year, the total commission cost plus
all the other friction from trading can easily
eat up 2 % or 3 % of your account's value every
year. And that's a permanent loss, even if the
investments themselves go nowhere. It's a permanent
loss. The principal -agent problem is crystal
clear. The advisor gets richer by making your
account poorer through fees. That's a huge incentive
for bad behavior. And the next model is maybe
even more profitable for the advisor. Number
four. The load or commission on products. Right.
This is a commission based on how much you invest
in a specific product, like a mutual fund or
a variable annuity. These are often called loads.
So if a broker sells you a mutual fund with a
front end load. They might get paid, say, four
or five percent of your investment right off
the top. So if you invest ten thousand dollars,
five hundred of it goes straight to the broker
and never even gets invested for you. And the
conflict is that there might be a better, cheaper
fund out there. Of course. If the market has
an identical low -cost fund that pays the broker
zero and no load fund and another high -cost
one that pays them 5%, the whole structure pushes
them to recommend the one that's better for them,
not for you. Okay, method number five. Mark up
or mark down. This is common in firms that have
their own inventory of products, like bonds.
When you buy one of their house bonds, they sell
it to you. at a markup over the real market price.
And when you sell it back. They buy it from you
at a markdown. It's a subtle way they make a
profit on the transaction and steer you toward
their own products instead of whatever is most
competitive on the open market. And finally,
the one that really defines the modern wealth
management world. Number six, the assets under
management or AUM fee. This is the dominant model
for RIAs. It's a periodic fee, usually charged
annually. That's just a percentage of the total
assets they manage for you. And the standard
figure is usually around 1%, right? 1 % is the
number you hear all the time. So if you have
a $5 million portfolio with them, they charge
you $50 ,000 every year. Now, the conflict here
is different. It's not about churning. No, the
AUM model is good because it doesn't encourage
a lot of trading. The conflict here is all about
asset gathering. At the expense of good advice.
Precisely. If an advisor makes $10 ,000 a year
on your $1 million portfolio and you tell them
you have $200 ,000 in cash you're thinking of
using to pay off your mortgage. That's bad for
them. It's terrible for them. If you pay off
that debt, their AUM goes down and so does their
income. They are financially incentivized to
tell you to invest that cash with them instead,
even if paying off high interest debt is clearly
the smarter financial move for you. So it's unavoidable.
This split between commissions and fees is the
great dividing line in the entire industry. And
it's so important it defines the two main regulatory
categories in the U .S. Yeah, if you look at
how financial advice is structured in the U .S.,
it all really rests on these two very distinct
pillars. And they're defined by how they're paid
and what standard of care they owe you. Okay,
so what's pillar number one? Pillar number one
is the broker -dealer, or BD. These are the firms
and their agents who earn commissions from sales.
Transaction model. Exactly. They're regulated
by FINRA, the Financial Industry Regulatory Authority,
and they operate under the suitability standard.
We'll dig into what that means, but for now,
just think of them as being in the business of
facilitating a sale. And pillar number two. That's
the registered investment advisor, or RIA. These
firms and their reps usually charge a fee, most
often that AUM fee. And here's the crucial part.
RIAs are legally required to be fiduciaries.
They have to put your interests first. They must.
And their registration is handled either by the
state or for the big ones at the federal level
with the SEC. So the oversight is all broken
up. It's completely fragmented. Femora handles
the brokers. The SEC handles the investment advisors.
And then you have state authorities that regulate
insurance companies and their agents. So one
person, if they have all those registrations,
could be operating under three different rule
books depending on what they're trying to sell
you in that moment. Wow. And this whole two pillar
system, it's not staying still. The sources show
a huge shift happening, especially between 2007
and 2018. The data is really stark. It tells
a clear story about what consumers want and what
regulation is pushing for. Over that decade,
the number of independent broker dealer firms,
the commission guys. It fell off a cliff. Really?
Yeah, from over 1 ,000 firms down to just over
800. The commission model was shrinking. And
at the same time, the RIA side. The RIA industry
just exploded. It grew substantially from around
9 ,500 firms to over 15 ,000. It's a massive
migration of advisors and money toward the fee
-based fiduciary model. So advisors can work
for a big wire house, a smaller independent broker
-dealer, or be an independent RIA. But then there's
this weird middle ground, right? The hybrid RIA.
The hybrid RIA is a really complex beast. They
are duly registered. They're registered as both
a broker -dealer rep and as an RIA rep. Which
means they can collect both fees and commissions.
Exactly. When they act as an advisor, they charge
a fee and are a fiduciary. When they act as a
broker, they collect a commission and only have
to meet the suitability standard. It's an ethical
tightrope. How is a normal person supposed to
know which hat they're wearing? That is the million
dollar question. And most clients have no idea.
Let's put some names on this. The sources say
LPL Financial was the biggest independent broker
dealer, one of the commission powerhouses. Right.
Along with firms like Ameriprise and Raymond
James. But even they felt the pressure. A firm
like Edward Jones, which was huge in the broker
world, completely stopped selling commission
based funds back in 2017. It was a direct response
to a new rule from the Department of Labor that
was about to take effect. It just shows how a
regulatory threat can force a company to change
its entire business model almost overnight. And
on the RIA side, the fee side, you have giants
like Edelman Financial Engines managing hundreds
of billions of dollars. And the infrastructure
behind them is really concentrated. It is. Something
like 80 % of all the money managed by RIAs, that's
trillions of dollars, sits on one of just four
big platforms, you know, places like Fidelity,
Schwab and Pershing. They're the backbone that
lets all these RIAs operate. So it's clear the
fee -based model is winning. But the old commission
model? It's not dead. The sources said Merrill
Lynch had largely avoided the RIA model as of
a few years ago. That's right. While others like
Wells Fargo and Goldman Sachs were starting to
embrace it. So you still have this clash of philosophies,
even inside the most famous names on Wall Street.
OK, we've defined the two pillars. Now we have
to get to the absolute heart of the matter. The
legal difference between being a fiduciary and
just being suitable. The concept of the fiduciary
standard, it's really the highest level of trust
in financial advice. It's the highest legal standard
of care. And for an RIA, it's not optional. It's
mandated by law. Which law? The Anti -Fraud Provisions
and the Investment Advisors Act of 1940. It's
been on the books for a very long time. And what
does it actually require them to do? In the simplest
terms. It means the investment advisor must hold
the client's interest above its own in all matters,
full stop. So if there's a choice. If a choice
exists between what makes the advisor more money
and what's better for the client, the fiduciary
has to choose the client's benefit. every single
time. And the SEC has actually spelled this out,
right? It's not just a general idea. No. The
SEC has four very specific duties. One, always
place the client's interest first. Two, make
reasonable investment recommendations that are
free from outside influences. So no kickbacks
from fund companies. None. Three, they have to
select brokers who provide the best execution
for trades, meaning the most favorable terms
for the client. And four, and this is critical,
they have to make recommendations based on a
reasonable inquiry into your specific situation,
your goals, your finances, all of it. The SEC
even has a rule, Rule 204 about their code of
ethics. How does that work in the real world?
That rule is so important because it tackles
conflicts from personal trading. The firm's code
of ethics has to have standards of conduct, and
it has to address what happens when employees
trade for their own accounts. To stop them from
front -running their own clients. Exactly. To
stop a situation where an advisor buys a stock
for themselves, then recommends it to all their
clients to drive the price up, and then sells
their personal shares for a profit. The code
requires surveillance to minimize that kind of
self -dealing. Okay, that's the high bar. Now
let's cross back over to the broker -dealer side,
which operates under that much lower standard.
standard suitability. And they can do that because
of an exemption in that same 1940 act. That's
right. Section 202A11C of the act basically says
that if a broker dealer's advice is solely incidental
to their main business of selling securities
and they don't get any special pay for that advice,
they're exempt from being a fiduciary. The law
basically sees them as salespeople. It does.
And salespeople aren't held to the same standard
as expert consultants. So if the RIA has to recommend
the best option for you. The broker dealer, regulated
by FINRA, just has to recommend something that's
suitable. Let's use an analogy here. Okay, the
shoe store analogy works well. Let's say you
walk into a shoe store. The broker dealer, under
the suitability standard, just has to show you
a pair of shoes that fits what you asked for.
You need running shoes. They show you running
shoes. That's suitable. And they have to do their
homework first, right? The know your customer
rule. Yes. FINRA rule 2111, the know your customer
rule, requires them to reasonably find out your
financial status, your goals, your risk tolerance.
But those suitable running shoes they show me
might be the store's own brand, cost $300, and
pay the salesperson a huge commission. While
there's a better, cheaper pair from another brand
sitting in the back room. Exactly. Under suitability,
the broker is not required to even tell you about
the better, cheaper pair. They only have to show
you something that is not unsuitable. They meet
the letter of the law without meeting the spirit
of putting your interests first. Now, to be fair,
NRI has tried to raise this bar a bit. After
2012, that Rule 2111 was expanded. That was a
key change. Before, it was really just about
individual trades. The new rule expanded their
liability to include recommendations of strategy.
So advice on taxes, retirement, things like that
now falls under suitability. And they also have
to advise you to hold something, right? Correct.
A broker can't just recommend something and then
ignore it if it starts performing terribly. They
now have a duty to ensure the investment or the
strategy remains suitable for you. It's a higher
standard than it was, but it's still not a full
fiduciary duty. And this all just gets even more
confusing when we looked at that hybrid advisor
again, the person who was both a broker and an
RIA. It's an explosion of conflict. In theory,
they have to tell you which hat they're wearing.
Right now, I'm acting as your broker and selling
you the suitable product for a commission. Then,
OK, now I'm putting on my fiduciary hat and giving
you advice for a fee. But how can a client ever
really know that the advice isn't just a setup
for the sale? They can't. That lack of clarity
is why many people are so skeptical of the hybrid
model. And on top of that, many of these hybrid
advisors are stuck on what's called a captive
platform. Meaning? Meaning their broker dealer
affiliation limits the products they can recommend.
So even if they're acting as a fiduciary, if
they can only choose from a pre -approved list
of funds from their parent company, their advice
is inherently restricted. True independence is
really only found with those independent RIAs
who aren't tied to a broker dealer. This whole
regulatory mess where you have two totally different
ethical standards is what led to the huge political
battles we saw over the last decade. The pressure
to get rid of this two track system really ramped
up after the 2008 financial crisis. Yeah. I mean,
there was a feeling that if brokers had been
held to a higher standard, some of the worst
parts of the crash might have been avoided. And
Congress responded with the Dodd -Frank Act in
2010. It was a massive piece of legislation,
but a key part of it gave the SEC the authority
to study. this issue and if they saw fit to extend
that high fiduciary duty to cover brokers. So
the SEC looked into it. They did. And their own
study in 2011 came back with a clear recommendation.
Move forward with a new rule to create a uniform
fiduciary standard for both brokers and investment
advisors when they're giving personalized advice.
The path seemed clear. It did. But rulemaking
at this level is incredibly slow and politically
charged. And the financial industry has a very
powerful lobby. the SEC just sat on it for years.
And because the SEC didn't act, another government
agency decided to jump in, the Department of
Labor, the DOL. This is where the story gets
really dramatic. The JAL used its authority over
retirement plans under a law called ERISA to
make a move. In April 2016, they finalized their
own landmark rule. What was the rule? The genius
of it was its focus. The rule said that any financial
professional working with retirement accounts,
so IRAs, 401ks, all of that, had to act as a
full fiduciary. Wow. That's a direct hit on the
brokerage industry's business model. All that
retirement money. which is the most important
savings for most people. Suddenly, for all that
money, a broker couldn't just sell a suitable
product anymore. They had to recommend the best
one, the one with the lowest cost, the one that
was truly in the client's best interest. This
was a direct attack on high commission products
that were eating away at people's retirement
savings. A direct strike. Now, to allow the commission
model to even survive, the rule included something
called the Best Interest Contract Exemption,
or BICE. A broker could still get a commission,
but only if they signed a legal contract with
the client promising to act in their best interest
and be transparent about costs. So how did the
industry react? The outcry was immediate and
deafening. Critics argued that it would be too
expensive to comply, and they claimed it would
actually hurt small investors. Oh, so? They argued
that the cost of compliance would make it unprofitable
to give advice to people with smaller retirement
accounts. That argument, that fiduciary standards
hurt small investors, is often industry code
for, we can't make enough money off them under
this stricter standard. And the data showed advisors
were worried. A survey found 73 % of advisors
thought the rule would hurt their business, and
66 % said they would immediately have to re -evaluate
the products they were recommending. Which basically
proves their product shelf was based on their
own pay, not just what was best for clients.
It's a pretty clear admission. But despite the
rules starting to take effect in 2017, the legal
challenges from the industry were relentless.
And they worked. The rule didn't last long. It
was brutally short -lived. A federal court, the
Fifth Circuit Court of Appeals, officially vacated
the rule on June 21, 2018. They said the DOL
had overstepped its authority. And just like
that, the biggest attempt to unify the advice
standard was dead. So with the DOL rule gone...
The SEC, the agency that was supposed to fix
this back in 2010, they finally did something.
They adopted Regulation Best Interest or RegBI.
They did. RegBI came out in June 2019, and it
created a new standard for broker -dealers. It
requires them to act in the best interest of
their customer when they make a recommendation.
Which sounds good. Better than suitable. It is
an improvement over the old suitability standard,
but... and this is the most important part, RegBI
does not create the same high fiduciary standard
that RIAs have to follow. It's a middle ground.
It raised the floor for brokers, but it didn't
unify the standard at the top. So we're still
left with two different standards. We are. And
the fight isn't over. The sources note the DOL
proposed a new fiduciary rule in 2020. This issue
is still very much alive. So since the Registered
Investment Advisor or RIA model is the one with
that highest fiduciary standard. Let's just dig
a little deeper into how they're set up. We know
an RIA gives advice for compensation, but what
decides if they register with their state or
with the SEC at the federal level? It's all about
size, specifically their assets under management,
or AUM. Ah, okay. If a firm manages less than
$100 million in assets, they have to register
with the state securities agency where they do
business. And if they're bigger. 100 million
or more in AUM, and they have to register directly
with the SEC. The idea is to have the SEC focus
its resources on the biggest firms with the most
potential market impact. And the people inside
these firms. The ones giving the advice are the
investment advisor representatives or IRRs. What
do they have to do to qualify? IRRs typically
have to pass a pretty tough exam, the Series
65 exam. It's very focused on fiduciary rules,
ethics, and economic theory. But you can get
that requirement waived if you already hold certain
professional designations. Like what? Things
like Certified Financial Planner, CFP designation,
or the Chartered Financial Analyst, CFA. These
are often seen as even more rigorous than the
exam itself. So they count as a pre -qualifier.
And this can vary state by state. It can. New
York, for example, has historically not had an
exam requirement for reps of SEC registered firms,
relying instead on the firm's own compliance.
OK, let's get back to the money. The management
fee. This AUM model isn't just for individual
RIAs, right? It's how the whole institutional
investment world works. That's right. For an
individual RIA, the fee is usually that 1 % of
AUM. The sources say about 95 % of RIAs use this
model, but the concept is much bigger. One thing
about RIAs, they can't really advertise their
performance like a mutual fund can because every
client's portfolio is different. Correct. But
if they do use performance data in their marketing,
the SEC requires it to be factual and not misleading.
So how does this AUM fee concept work for different
kinds of funds like mutual funds? With mutual
funds, the fees are very heavily regulated. They
have to be spelled out clearly and they have
to be approved by the fund's board of directors
and by the shareholders. That's a protection
for retail investors. And what about something
more complex like private equity funds? PE funds
have a much different fee structure. The investors,
or limited partners, pay the manager. And the
fee isn't based on the day -to -day value of
the assets. What's it based on? In the first
few years of the fund, the fee is based on the
total amount of money investors committed to
the fund, whether it's been invested yet or not.
Usually it's 1 % to 2 % a year. Wait, so if I
commit $100 million, they start charging me 2
% on the full $100 million, even if they've only
invested $10 million so far? That's right. It's
a powerful incentive to take their time. Later
in the fund's life, the fee basis changes. It
drops to being based only on the capital that's
actually been invested. And on top of that fee,
PE managers get carried interest, which is their
big performance bonus, usually 20 % of the profits.
And finally, what about hedge funds? Hedge funds
are famous for the 2 in 20 model. The management
fee, the 2, is a percentage of the fund's net
asset value. It can range from 1 % to 4%, but
2 % has been the standard. So on a billion -dollar
fund... That's a $20 million management fee.
$20 million every year. And they get that fee
even if the fund loses money. It just shows that
whether you're talking about your personal advisor
or a giant hedge fund, the compensation structure
is the force that drives everything. We spent
a lot of time on the U .S. system, which is clearly
full of these conflicts. But the problem itself
isn't unique. Let's zoom out and see how some
other major countries handle this. It might give
us a clue about where the U .S. could go. Let's
start with the United Kingdom. In the U .K.,
advisors have to pass exams and be authorized
by the Financial Conduct Authority, or FCA. And
the FCA has to be satisfied that they are a fit
and proper person. But the really interesting
part is how they classify advisors. Yes. The
UK has a mandatory distinction. Advisors are
either restricted or independent. What's the
difference? An independent advisor is legally
required to select solutions for you from all
the products and providers available in the entire
market. A restricted advisor, on the other hand,
can only advise on a specific area, like pensions,
or can only use products from their one affiliated
company, like a bank. So they basically put a
label on the captive platform advisor. That's
a much clearer system for the consumer than the
U .S. hybrid model. It's completely transparent.
It removes the ambiguity. Interestingly, the
UK also used to have a best advice standard,
but they've since moved to a standard of appropriate,
which is a little closer to the U .S. suitability
standard. What about somewhere like Ireland?
In Ireland, the benchmark is the QFA. or qualified
financial advisor. You have to get a diploma
and do continuous professional development. It's
all about ensuring a baseline competency. Now,
Australia is a really fascinating contrast to
the US. It is. In Australia, advisors have to
be qualified and licensed, similar to other places.
But here's the massive difference. In Australia,
financial advisors are subject to fiduciary obligations.
So everyone is a fiduciary. Everyone giving that
kind of advice is. It's the universal standard
that consumer advocates in the US have been fighting
for for years. They just did it. They mandated
the highest standard of care for everyone, whether
they're paid by fee or commission. That's a powerful
comparison. While the US has been locked in this
political fight for a decade, Australia just
made it the law. Exactly. And in New Zealand,
the focus is also on mandatory competence, with
a national certificate required to give advice.
So back in North America, what's the situation
in Canada? Canada system is very decentralized.
You need licenses to sell specific things like
insurance or mutual funds. But the big gap is
that there's very little regulation over who
can just call themselves a financial planner,
except in Quebec. So it's like the Wild West
for the title itself. Pretty much. Which makes
voluntary designations like the CFP all the more
important for consumers to look for. And then
in Asia, you see more centralized control. In
India, the regulator, SEBI, requires you to be
a... Register Investment Advisor, or RIA, a very
specific designation. So if you put it all together,
this global snapshot really shows that the U
.S. system of maintaining two separate conflicting
ethical standards is a bit of a regulatory outlier,
especially compared to a country like Australia
that just chose to mandate the highest standard
across the board. And that brings us to the end
of this deep dive. I think we accomplished our
mission. We defined all the players. We followed
the money. And we really clarified that huge
split between the two pillars of finance. advice.
We did. We established that the fee -based, client
-first fiduciary standard is the high bar. It
requires the advisor to always, in all circumstances,
put your interests above their own. And we contracted
that with the commission -based suitability standard
for broker -dealers. That only requires an investment
to be appropriate, not necessarily the best or
the cheapest or the most effective choice for
you. We also walked through that high -stakes
political drama. from the hope of the Dodd -Frank
Act to the intense industry lobbying that killed
the DOL fiduciary rule, leaving us with the compromise
of Reg BI. So the takeaway for you, the learner,
is really practical. The first question you have
to ask any financial professional is, are you
a fiduciary for all the advice you provide me?
And how do you get paid? That's the key. It's
the key. Understanding their pay, whether it's
AUM fees, commissions, product loads, that's
the filter you have to use. If the legal standard
they follow or the product they sell makes them
more money, you have to be incredibly careful.
So I'll leave you with this final provocative
thought to consider. The fact that the DOL fiduciary
rule was struck down shows just how fragile even
the biggest consumer protections can be when
faced with intense. industry opposition. So given
that the independent RIA world continues to grow,
but that lower suitability standard still exists
for all non -retirement accounts, how much longer
can the U .S. really sustain two completely different
ethical and legal standards for professionals
giving personalized financial advice to the very
same person? Right. It's a tension. It's a fundamental
tension that defines the entire landscape of
personal finance. And it's one that could be
resolved or maybe just reignited at any moment.
Something critical to think about as you navigate
your own financial journey. Thanks for diving
deep with us. We'll see you next time.