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Are You My Fiduciary?

2 min read

Andy Terry is a professor of finance in the School of Business at the University of Arkansas at Little Rock. He’s also a chartered financial analyst and a registered investment adviser, and a friend’s infuriating experience has prompted him to expand that part of his professional life.

“Frankly, it’s in response to what I’ve seen,” he said. “I can’t fight them legally, but I can compete.”

Terry recently joined Sarah Catherine Gutierrez’s SC Financial Care in Little Rock, a fee-only financial planning service that was featured earlier this month in Investor’s Business Daily. Terry and Gutierrez are paid by the hour to make recommendations to clients, and they take no commissions or fees from the investments their clients ultimately choose.

“That’s the very first problem,” Terry said. “The average investor has no idea what they are buying or what they are paying for investment advice.”

As a CFA charter holder, he has an ethical duty to act as a fiduciary for his clients, Terry said. But as an investment adviser registered with the Arkansas Securities Department, he has a legal fiduciary duty.

The exact language is important. An insurance agent who sells retirement products such as annuities may be an RIA and therefore have a fiduciary responsibility to the client — or she may not. “Retirement adviser” and “financial adviser” sound a lot like “investment adviser,” but unless they are actually RIAs, they may not have a fiduciary duty.

The Arkansas Securities Department, headed by Commissioner Edmond Waters, didn’t respond to a request for an interview about the U.S. Department of Labor’s proposal to expand the definition of a fiduciary to anyone who gives retirement advice.

Waters’ predecessor Heath Abshure, attempted in 2009 to expand the fiduciary duty to insurance agents by requiring those who recommend investment vehicles to register as investment advisers.

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