Wednesday, October 15, 2014

Are You Getting Fiduciary Duty? (Or Are You Helping Someone Win a Sales Contest?)

The New York Times recently ran a story about a retired couple who was looking for a higher rate of interest than their bank CDs could provide. The bank's teller recommended that the couple speak with the bank's investment department. The bank's investment department, which wasn't required to act as a fiduciary, recommended $650,000 worth of annuities which happened to pay an annual commission to the bank investment department of $24,000.

The bank claims the annuity was "suitable" and the couple (and probably their attorneys) say they were mislead and assumed they were getting fiduciary duty...meaning the investment department would act in the client's best interest at all times (rather than the bank's best interest). This is yet another story of people thinking they are getting fiduciary investment advisory when actually all they are getting is a product salesman.

Had the couple gone to a Registered Investment Advisor they would have gotten fiduciary duty. Even better, they probably would have almost $24,000 per year in extra income. Instead, they were sold a bill of goods by someone who was being paid on commission and who had zero fiduciary duty to his client.

Before you move your retirement money to a money manager, double check that you are moving it to someone who acts as a fiduciary at all times. Ask for a signed copy of their fiduciary pledge. Ask for a copy of any complaints the firm has had or the individual has had. Double check that the individual works only as a fiduciary and will always work with your best interests placed first.

Click here for the New York Times story or contact us for a copy.

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