Download HBK Presentation - rebel Financial

HBK Lunch & Learn:
Reflecting on the financial services
industry.
Brought to you by:
Outline:
• Advisor/Firm Differentiation.
• The fiduciary standard.
• A little about rebel Financial.
Insurance
Companies
Investment
Providers
Transaction
Oriented
Soft Money
Cash
solicitors
Broker/Dealer:
Commissioned
Agent
Conflicts of interest
from product sales
Suitability
standard to
client
Efficient for
DIYers
Commission
schedules
Investment
Providers
Are
Fiduciaries
Tend to be more
expensive for
smaller clients
Client
Registered
Investment
Advisor (RIA)
Much less
conflicts of
interest
Broker/Dealers
Paid for
“Advice”
Tend to be more
planning oriented
Hybrid Firms/Advisors
1. Both Broker/Dealers and RIAs.
2. They have the most flexibility to serve clients.
a) Sell products:
i. Many that RIA/Fee-only firms can’t/won’t
sell.
b) Sell advice:
i. Fee-based and fiduciary.
3. They also have the largest conflicts of interests.
4. It is super confusing for the client to know when
they are representing the client’s best interests or
the company’s bests interests.
Summary & Pointers:
1.
2.
3.
4.
Understand who you’re referring to and why.
Generally, it’s the agent/advisor that makes the
difference, not the firm.
RIA/fee-only firms have much less conflicts of
interest and clients receive a much stronger legal
standard of care (fiduciary).
At a minimum, we recommend that trusted
professionals at least look for a Certified Financial
Planner (CFP) when referring clients to a financial
advisor.
DOL and SEC Fiduciary
Standard Changes
1) What is a fiduciary?
a) Someone that is required to look out for the best
interests of another.
2) When are fiduciaries important?
a) When would you feel comfortable dealing with a
professional whose main objective was to maximize
their gain/profit versus your well-being?
i. Your doctor, lawyer, sheriff, military commander,
accountant, etc?
What about our financial
well-being?
Did you know that over 90% of investors believe
that their advisor is acting as a fiduciary towards
them when in reality it is less than 20%?
The SEC’s failure
The Investment Advisors Act of 1940 created RIAs and a fiduciary
standard.
It was intended that RIAs provide fiduciary advice and B/Ds,
insurance companies, investment companies would “SELL” products.
Products sellers have learned that they can sell much more if they’re
perceived to be “advisors” and have slowly but very effectively
whittled away the most important distinction between true fiduciary
advisors and product sales reps.
The SEC has tried for over 25 years, unsuccessfully, to enact a
uniformed fiduciary system to correct the problem.
The DOL is moving forward
1.Significantly expanding who is a
fiduciary to ERISA plans.
2.Making product reps sign “Best Interest
Contracts” (BICs).
3.Making advisors/reps act as fiduciaries
when rolling over ERISA funds to IRAs.
Overview:
• History of fiduciary advice
• Why has it effectively failed
• Current changes & possible
ineffectiveness
• Still have option to effectively
implement fiduciary
rebel Financial Overview:
• Trusted Fiduciaries
• Experienced CFP
• Reduced expenses
• Options for all size clients