Are You In Good Hands?

July 21, 2015

Written by Tami Tolsma

The Securities and Exchange Commission is being lobbied to establish a universal fiduciary standard for the benefit of investors everywhere. Investor advocate groups and industry representatives including AARP, CFP Board of Standards, the Financial Planning Association (FPA), and the National Association of Personal Financial Advisors (NAPFA) have conducted research and written the SEC to provide evidence that illustrates the harm caused by broker-dealers who operate according to a sales relationship rather than an advisory relationship. Investors are being negatively affected and many of them are oblivious of the damage to their portfolio.

Registered Investment Advisors (RIAs) are already held to the fiduciary standard, which mandates the advisor to act in the best interest of the client, but for broker-dealers and other non-RIA advisors this would be a huge change.  The fiduciary standard outlined by Section 913 of the Dodd-Frank Act requires the advisor to put the client’s well-being above sales incentives and personal commissions. Broker-dealers aren’t held to this fiduciary standard, and unaware investors are suffering by way of high cost investment vehicles and poorer performance due to hidden fees and commissions. To read more from this article on the CFP Board website, visit

Brokers and non-RIA advisors have an incentive to keep their clients in these poor investment vehicles because they receive annual commissions on the sum. It’s selfish advice, with the focus on the benefit to the advisor/salesman instead of the benefit to the client. These companies and individuals are masquerading as financial advisors, so that many potential investors don’t know the difference between what they are signing up for and the relationship available to them with an independent RIA.

When our attention is brought back to these sales-based relationships, it makes our blood pressures rise.  Too often a potential client comes in after being sold one of these products but we can’t help due to exorbitant surrender charges. We become righteously upset for the client’s sake. When local firms are featured in magazines and newspapers as claiming to act in a client’s best interest but still sell their clients investment products laced with commissions, we become more determined to help as many people in our reach as possible before they are further misled by the wolves in sheep’s clothing.

The fiduciary standard goes hand in hand with what HSC believes in and how we operate. If we were not legally held to it, nothing about our business would change. One of our core values as a firm is to operate in the best interest of our clients. Read more about our fee-only approach here. We manage our clients’ portfolios in the exact way we manage the portfolios of our own families. We essentially view each client as an extension of our family, and as such we want them to accomplish their goals and maximize their financial potential.

Until the SEC rules that all non-RIA financial advisors are held to the fiduciary standard, it would benefit you to ensure your finances are in the capable hands of someone who doesn’t see you as a potential commission.


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