Why Financial Industry Regulations Impacts You

Currently, the financial advisory industry is in the midst of numerous regulatory changes with the most important issue involving the definition of “financial planner” and “financial advisor” and whether these titles require professionals to have a legal responsibility to put their clients’ interests first.  As the law stands now, only advisors registered with the SEC (or state regulator) are held to the fiduciary standard (Note: all financial advisors at Lighthouse Financial Advisors are registered with the SEC and adhere to the fiduciary standard).  Fiduciary standards are typically associated with professions such as medicine and law.

The difference is fiduciaries get paid to provide advice, while brokers get paid based on the investment products they sell.  Unfortunately, most consumers do not understand the difference.   The sales side of the industry is lobbying hard to keep the current standards in place, while the fiduciary advisors are working to create professional standards and mandatory disclosure to consumers.

The goal is to create a new profession that people will recognize for higher standards and personal care.  This will result in less expensive financial products, clear consumer information and more planning options for the middle class.

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