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As the Department of Labor wrestles with creating a uniform fiduciary standard for financial advisors, we can’t help but think of the evolution of the business as well as the unique role of the advisor in the American experience. The new fiduciary rule builds off a long line of accountability measures, rooted perhaps in the Golden Rule, that evolved under industry guidelines to the Prudent Man Rule, which in turn became the Prudent Expert Rule.  As of last week, with regulatory motivation, the industry brings us the Fiduciary being. Characterizations aside, the work of the financial advisor and the utility of long-term investment are fundamental to the fabric of America. Norman Rockwell, the artistic interpreter of our most cherished founding principles, was fond of painting scenes depicting town doctors protecting the health of the people, the good veterinarian looking out for our four-legged friends, and country lawyers defending the rights of the citizens. Financial advice, so important and integral to the American story, unfortunately remains unpainted. There is no panel dedicated to the sage financial advisor offering his prudent caution when markets are overly exuberant and his optimism when things seem dire. We stand with other professionals that work and grow alongside our clients; yet we are often somehow held at arm’s length from the toasty glow of the American way.

This is in part because we have no durable standard that unites our calling into a profession. We have no Hippocratic Oath; or legal bar to enforce the conscience of good conduct throughout our field. Instead, the activity of the finance man (or woman) functions as licensed work not infused so much with the spirit of a higher calling but instead with spiritless rules that merely authorize us to conduct business in a certain jurisdiction. Partially as a result, the industry has become bifurcated between those that give advice and those that glad hand products on a transactional basis.

Good financial advice is needed now more than ever. Interest rates are hovering near all- time lows, bringing down long-term forecasts for most investable assets. In addition, Americans are retiring into this environment at a rate of up to 10,000 per day. Fees, once hidden by consistent portfolio returns are now laid bare by such a stark investment landscape. In a 2011 survey by AARP, 71% of those polled did not believe they were paying any fees on their 401(k) assets, yet their returns are often stymied by as much as 3% in cumulative fund and consultant level fees. White House economists estimate that $17 billion is lost every year to these expenses. For retired Americans, this means missing out on thousands of rounds of golf and countless Alaskan cruises. The average investor’s knowledge of their investment choices and the fees associated with their accounts are so deficient that it leaves them highly vulnerable to deceit in an environment where retirement outcomes are increasingly shifting from the responsibility of the employer (pensions) to that of the individual (401ks).

As a result, the Department of Labor has decided to enforce a new standard; one that requires financial professionals to disclose fees and potential conflicts, and maintain their service for the best interests of the client. Acting in the best interests of the client should be so fundamental to what we do that it almost seems absurd that the industry has to codify the concept into enforceable law. Yet certain aspects of the financial services industry have fought doggedly against this standard and the final product is itself a result of substantial back room compromises.

Now is a good time to reflect on our practice within the framework of a developing new standard in the field. Is our fee structure transparent? We charge clients one fee inclusive of investment management and financial planning. Our practice invests in individual stocks and bonds so there are no additional layers of fees, more commonly found in mutual funds and variable annuities. In contrast, these products

often contain as much as 1-3% of mostly undisclosed fees in addition to the cost of advice. Do we have any conflicts of interest? Our firm has no obligation to any broker, bank, mutual fund, or insurance company. Our investment recommendations are made through the use of an independent research process and portfolios are mapped to the specific needs of each client. Are we acting in the best interests of the client? Our compensation is advice driven and fee based. Unlike transactional products like annuities, there is no windfall to the advice we bring to each client. Instead, it is ultimately in our best interest to provide exceptional service and results over the long-term in order for our practice to realize the rewards of our hard work.

The industry hopes to develop uniform practices that are set at a higher standard. At the very least, the Department of Labor is attempting to impose a minimum standard available to the investment public. For those of us who sit comfortably above that line, we can only cheer the efforts of the DOL to not only protect the growing roster of retirees but also give our profession additional credibility. Norman would be proud.