The Fiduciary Rule

Financial advisors and brokers must act in the best interest of the client [borrower] and put their client’s interest above their own. Conflicts of interest should be exposed and the client should know that many Advisors from investment banks have the mind set of whatever the outcome is with the client, they will still be paid. Implementing a fiduciary rule may make them more cautious.

Had the fiduciary rule been in place over a decade ago, the UK’s biggest financial scandal, Payment Protection Insurance (PPI), may not have happened. Or the financial Advisors were more transparent and not sales and commission driven, then the reputation of several banks could have been saved.

A lot of the time people are missing the piece of knowledge that the Advisor is receiving their commission through the cost of the sale which is an added, sometimes unknown, fee to their product. People are being led to believe that their financial advice is free as there is no upfront cost.

The argument is that if there was a Fiduciary rule in place then it would eliminate conflicts of interest and financial advisors would be more cautious when selling a product meaning their customers would always get the best rate. The rate that is right for them.