Investment Professionals

Financial Advisor or Investment Salesperson? Brokers and Insurers Want to Have it Both Ways

When is a “financial advisor” really an advisor and when is she just a salesperson? The answer to that question has important implications for millions of Americans who turn to financial professionals to help them navigate often complex decisions regarding how best to invest for long-term goals, including retirement. It turns out, however, that how certain “financial advisors” answer that question varies greatly depending on the context. These are the transaction-based financial professionals typically employed by broker-dealers and insurance companies.

When they are marketing their services to the investing public and enticing clients into handing over their hard-earned savings, these sales-based financial professionals present themselves as “trusted advisors” whose only concern is their clients’ best interest. But try to hold them legally accountable for meeting that standard, and those same “advisors” quickly change their tune. Because they are salespeople who are “merely selling” investment products, they claim, no fiduciary standard ought to apply.

The market practices chronicled in this white paper show that financial firms and their sales-based financial professionals function as investment advice providers, despite financial lobbyists’ legal claims to the contrary. They also illustrate why it was appropriate for the DOL to determine that such practices demand fiduciary protections. As the rule is implemented, retirement savers will benefit from receiving genuine advice that’s in their best interest rather than advice that is influenced by conflicts of interest.

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