Private Wealth Roundup: Investors Cold on “Fee-Based” Advisors – Lauren Foster

Are you a “fee-based” financial adviser who uses the term with clients and prospects? You’re nodding your head? Uh-oh.

According to the article, “‘Fee-based’ is a Four-Letter Word for Financial Advisers,” this “is not a phrase that warms investor hearts.” At least, that is the conclusion based on a recent study from Sullivan and Northstar titled “Rebuilding Investor Trust.” Respondents were asked whether they had a negative or positive reaction to a number of words or phrases often used in the industry, and about 64% said they had a negative response to the phrase “fee-based,” the article reported.

Here are some other interesting articles from the past month that touched on matters related to private wealth:

  • A key distinction among investment professionals is the standard of duty or care they are required to follow — that is, the fiduciary standard versus the suitability standard. A recent research paper, “The Impact of the Broker-Dealer Fiduciary Standard on Financial Advice,” examined “whether a relatively stricter fiduciary standard of care impacts the ability to provide services to consumers.” The finding? According to the authors, there were “no statistical differences” between states with strict fiduciary standards and those with no fiduciary standards in regards to “the percentage of lower-income and high-wealth clients, the ability to provide a broad range of products including those that provide commission compensation, the ability to provide tailored advice, and the cost of compliance.”
  • In “How Much Do We Really Know?” Ross Levin pondered the difficulty of distinguishing what he knows from what he believes. “We need to improve our ability to notice things in our clients and ourselves,” he wrote. “Noticing our responses or reactions to issues and the environment can help us better see how we are getting in the way of sound planning.”
  • Reuters reporter Chris Taylor wrote a good piece on target-date funds: “Why Bother with Target-Date Funds?
  • In “Do We Need Protection from Trust Protectors?” the authors took a look at two articles “that seem to take opposite sides on the issue of trust protectors.”
  • And last, but not least, is it better to realize capital gains now in the lower tax environment, or defer the tax liability and risk liquidating in a higher tax environment? Some answers in Parametric’s new white paper, “Prepare for Higher Tax Rates: Pay Now, or Later? Revisited.”

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Lauren Foster | April 16, 2012 at 10:54 am | Categories: Private Wealth Management | URL:


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