Ah, Spring, that eternal season of baseball, Easter and turning one's heart to … budget poker? For those without a scorecard, here's the quick recap:
Seventy years ago, Congress passed the Investment Advisers Act of 1940 ("40 Act"). The 40 Act requires anyone (other than banks) providing investment advice to act under the fiduciary standard (as in "the client comes first). This leveled the playing field between banks (whose investment advising trust departments long ago fell under the fiduciary standard) and those (referred to as "Registered Investment Advisers" or "RIAs") who offered investment advice outside the bank trust model.
Since then, new financial services industries, finding loopholes in the 40 Act (q.v., "Merrill Lynch Rule") or finding themselves regulated by others (q.v., the insurance industry), discovered they could nose their way into the highly lucrative investment advisory – (called "advisory" since the "e" applies only to those operating under the 40 Act) – without regard to the fiduciary standard. Unlike RIAs, these advisors follow the less restrictive "suitability standard" (as in "anything but the fiduciary standard").
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Christopher Carosa
Chris Carosa has been writing a weekly article and monthly column for BenefitsPRO online and BenefitsPRO Magazine since 2011 and is a nationally recognized award-winning writer, researcher and speaker. He’s written seven books, including From Cradle to Retire: The Child IRA; Hey! What’s My Number? – How to Increase the Odds You Will Retire in Comfort; A Pizza The Action: Everything I Ever Learned About Business I Learned By Working in a Pizza Stand at the Erie County Fair; and the widely acclaimed 401(k) Fiduciary Solutions. Carosa is also Chief Contributing Editor of the authoritative trade journal FiduciaryNews.com and publisher of the Mendon-Honeoye Falls-Lima Sentinel, a weekly community newspaper he founded in 1989. Currently serving as President of the National Society of Newspaper Columnists and with more than 1,000 articles published in various publications, he appears regularly in the national media. A “parallel” entrepreneur, he actively runs a handful of businesses, including a small boutique investment adviser, providing hands-on experience for his writing. A trained astrophysicist, he also holds an MBA and has been designated a Certified Trust and Financial Advisor. Share your thoughts and story ideas with him through Facebook (https://www.facebook.com/christophercarosa/)and Twitter (https://twitter.com/ChrisCarosa).
