The Institute for the Fiduciary Standard

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Building a fiduciary culture of honesty, integrity, and expertise.

What is “Good Advice”?

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Author: Knut A Rostad

Introduction and Summary

Questions of good advice and financial planning are timely. 2016 will initiate the DOL COI Rule era, 76 years after the Advisers Act of 1940, and 47 years since the “birth” of financial planning.  And timeless. The force behind the DOL rule reflects the “shared mission” and question that attracted the financial planning founders in 1969: Can advice replace sales as the industry “driving force”?

2016 is important to the question of “good advice” because regulatory, technological, and market forces remind us why the foundation of good advice must be disinterested advice. Here, I highlight the arguments on fiduciary advice. I then discuss, citing the work of Arthur Laby, a basic (and overlooked) rationale for disinterested advice: common sense. Common sense informs investors’ views of sales and advice, generally, and do so for “good advice” as well.

Read the full Working Paper here.

 

Dan Moisand

 

Dan Moisand is a nationally recognized fiduciary fee-only financial planner, an Institute Real Fiduciary™ Advisor and Chair-elect of the CFP Board.

The Institute has enshrined the ‘Moisand Rule’ on fiduciary practices. It is basic and is more important today than ever: “You have to avoid conflicts. If I avoid a conflict, I don’t worry about it.”

Watch the video of Moisand speaking here.

Bob Veres

 

Bob Veres is a long term observer of financial planning. His Newsletter, “Inside information” Is a staple of leading planners. In the May edition he writes about fiduciary and the Institute.

"But a much bigger point is that the fiduciary standard—as Knut Rostad of the Institute for the Fiduciary Standard has pointed out—has been determined by the Supreme Court (1963 ruling) to be at the very heart of the Investment Advisers Act of 1940. It is the foundation of what it means to be an RIA registered with the SEC instead of a tipster or a tout."

- Bob Veres, Parting Thoughts ... The SEC's Own Compliance Culture