In my most recent Fiduciary Corner column, I wrote about how the financial services industry has an unfortunate history of information being withheld for the benefit of someone other than the investor. The recent example I cited was a July 31 complaint against Merrill Lynch by the Massachusetts Securities Division, alleging that Merrill Lynch intentionally pushed the sales of products it knew to be especially prone to failure at the time in an effort to minimize their losses, and Merrill Lynch's subsequent statement that their advisors were acting with good intentions in selling this investment product. However, if the allegations are true, it would seem to be a case not of whether or not the advisors were acting with the best of their intentions, but of the parent company using the trust their advisors have built up from their clients against them. So investors are not only left trying to find an advisor they can trust, but wondering if the advisors are even being armed with the best information available on their investment options.
With a seemingly endless parade of scandals with the common thread being that people in positions of trust suppressed vital information in an effort to benefit themselves, no one should be surprised by any less than increased scrutiny from regulators and legislators and decreased trust from investors. Unfortunately this creates a long, winding, and bumpy road to change. If the financial services industry wants to avoid being dragged down that road it should lead a change in course by committing to fiduciary principles and implementing fiduciary processes in the way investment products are structured and distributed.
Read my most recent Fiduciary Corner column in InvestmentNews for more.
Comments