Before the Advice, Check Out the Adviser
Say you sit down with a broker — one who isn’t legally required to act as a fiduciary — and the broker has access to a dozen mutual funds, all of which are deemed “suitable” for a particular customer. The broker can recommend the most expensive fund, even if it makes him more money at the consumer’s expense and isn’t preferable in any other way, Professor Laby said.
.. Advisers’ pay can provide clues about whether their interests may be mismatched with consumers’.
.. IF consumers really want to put prospective advisers to the test, they could try a direct approach: Ask them to sign an oath stating they will act as fiduciaries, like the one recently created by the Committee for the Fiduciary Standard, an advocacy group. Andrew Stoltmann, a securities lawyer in Chicago, said such an oath would be binding in an arbitration proceeding, which is how a vast majority of customer disputes are settled. “If the adviser refused to sign it, then the investor should run for the hills,” he said.