First rule of running others’ money? Do no harm




My Sunday Washington Post Business Section column is out. This morning, we look at the debate on the Fiduciary rule.

The print version had the full headline First rule of running others’ money? Do no harm, while the online version is The enlightened view on managing other people’s money.

Although I strongly favor the fiduciary over suitability rules as the regulatory standards for advisors, I wanted to explore what credible arguments exist against the fiduciary standard. Suffice it to say I struggled to find any rationale arguments opposed.

Here’s an excerpt from the column:

“In a 2011 study, the SEC staff published its conclusion that “all financial advisers and stock brokers should be placed under a uniform fiduciary standard.” This meant that brokers would have a clear legal obligation to put the interests of clients first — before even their own (gasp!) compensation. Further, anyone selling investment products or providing investment advice to the public must (gasp again!) disclose any conflicts of interest that might compromise that fiduciary duty.

That sounds like a reasonable set of rules. Doctors, after all, must “first, do no harm”; people who provide legal or accounting advice must put the interests of clients first as well. Why not apply those same standards to anyone who provides financial advice?

This is more than a mere matter of principle; a White House report found that conflicted investment advice costs the public about $17 billion a year in retirement accounts alone.”

This is an important issue that merits broad public discussion.



The enlightened view on managing other people’s money
Barry Ritholtz
Washington Post, March 20, 2016


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