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  • Bob Brooks

Will You Lose Your Financial Adviser?

As of today, financial advisers that are not fee based are not required to put your best interests first. I realize that might be a troubling notion. Why wouldn't my financial adviser put my interests first? They may or may not. They aren't required to because they are not required to act as a fiduciary.

Fee based advisers are required to do so. Commissioned based advisers are not. For years there has been a battle in Washington and in the courts system over this lack of regulation. Once regulators get a rule drawn up, lawyers challenge it in court and get it shot down.

The SEC finally passed a fiduciary rule called Regulation Best Interest.    

Regulation BI or Best Interest is a Securities and Exchange Commission (SEC) rule that requires financial advisers to only recommend financial products to their customers that are in their customers best interests, and to clearly identify any potential conflicts of interest and financial incentives the broker-dealer may have with those products.

It is supposed to go into effect June 2020. Of course, the lawsuits are starting to be filed so we will see. The purpose of me writing about this is not to explain how they would not act in your best interest or anything such as that. The point is to make sure you are informed as to what happens if this rule survives.

It changes everything in the business of giving financial advice. Mainly it increases liability for the adviser. So Broker Dealers who oversee advisers are telling their advisers to cut clients if they are in any way a perceived liability. That is everything from clients who don't have big enough accounts to clients who won't transition over to a fee based account from a commissioned based account. I also predict that this will shrink the industry because it will be harder for someone to remain in the business or get into the business as a new adviser.  

It could very well mean that the adviser community will only look to work with clients who meet a certain set of qualifications in order to reduce liability because of the new regulations. For the population that means that access to advice just became more limited. Plus I think that this will be even more problematic for fee based advisers as well because of the gray areas this new rule creates.

So what do you do?  

You should have a frank conversation with your adviser on the future and any unsuspected surprises. Second, if you need a new home, let's have a conversation. As a financial adviser I got into the business 27 years ago to help people not discriminate for various reasons.

For more information go to this LINK or email me at

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