Why the Fiduciary Standard Exists

Journal of Financial Planning
August 31, 2016

The unraveling process will not be easy. Firms that have built a sales culture to fit their heritage of product manufacturing and distribution and have become comfortable with giving advice without fiduciary accountability will now have to follow one of three paths:

  1. Stop giving advice to focus exclusively on product manufacturing and distribution;
  2. Exit product manufacturing to operate as an advisory firm; or
  3. Reconfigure internally to formally segregate the businesses, albeit under one roof in a house divided.

Which path each firm in transition chooses to take will be left to the wisdom and skill of executive leadership based upon the particular circumstances of their enterprise. The success of how and what they do to make the necessary transformation will depend in large part upon how deeply they understand why the fiduciary standard exists and embed fiduciary principles, processes, and practices in the fabric of their professional advisory business. Read More.