Is Your Financial Adviser Working Against You?


Most businesses value their customers, but inherent conflicts-of-interest in the financial services industry unfortunately prove this is too often not true.

Best government money can buy
Best government money can buy

Here’s why: The daily business in financial services is selling financial products, often without regard to fees and overall costs of the investment. Too often, this means more expensive or inappropriate products are sold that are designed to separate investors from their money. This is a recognized problem, so some reform-minded people in the financial business have proposed that a fiduciary standard be used by anyone offering financial advice.

Sounds simple enough, except there is one problem: adopting this standard, which puts the uninformed buyer’s interests’ ahead of the salesperson, totally disrupts the entire financial services industry sales model.

To combat this adoption of any new pro-customer standard, financial services lobbyists, including those representing mutual fund companies, hedge funds, insurance company, investment banks, regularly conduct lobbying campaigns to protect their interests. Their efforts are so successful that according to Open Secrets, “the financial sector is far and away the largest source of campaign contributions to federal candidates and parties, with insurance companies, securities and investment firms, real estate interests and commercial banks providing the bulk of that money.”

This obviously is no surprise, but few investors know that it is their own money which is used being used by these lobbyists to enact new laws and regulations that then work against the interests of the people providing the money in the first place. This includes, you, the uninformed investor.

And at last count, in 2014, an estimated 53.2 million households, or 43% of all U.S. households, owned mutual funds. The current estimate of the number of individual investors owning mutual funds is 90.4 million.  This means there are  millions of individual investors whose money is being diverted from their retirement and personal investing accounts into the coffers of lobbying firms that work against the interests of their own customers.  lobbyists

Here is a good example:

The largest lobbying group in the mutual fund industry is the Investment Company Institute (ICI.) According to, the ICI ranks second to Charles Schwab is making contributions to individuals and groups regarding the term “fiduciary.”

While it is difficult to tell specifics without a detailed examination, by looking at the full-service mutual fund companies (such as Principal Financial, LPL, Blackrock, Wells Fargo, Primerica and Mass Mutual), which all have huge, expensive to maintain, national sales organizations and are heavily involved in the 401(k) industry, it’s no great deduction to conclude they were all lobbying against the adoption of the fiduciary standard. (This chart covers 140 clients reported lobbying on specific issues containing the word “fiduciary” in filings covering the period 2006 to the present, according to Open Secrets.)

This means there are  millions of individual investors whose money is being diverted from their retirement and personal investing accounts into the coffers of lobbying firms that work against the interests of their own customers

In 2015, the ICI ranked as the industry’s second largest lobbying group. In 2011, the ICI employed five full-time, 30 part-time, and 75 outside lobbyists to get their pro-industry positions across to regulators and elected officials. The ICI gets their money from mutual fund companies, which, in turn get it from their own customer-shareholders.

In essence, shareholders’ fees are converted into contributions by fund companies for lobbying activities  which are then used to erode their own customers’ interests. For its part, the ICI is on record as opposing everything from the fiduciary standard, to proxy voting results, to transparency about 401(k) business relationships with plan sponsors. And to show that buying influence is an equal opportunity event in Washington, the ICI spends about the same in both political parties.

But this is only one of many financial services lobbying groups working against investors. From 1998 to 2008, the financial services industry spent $1.7 billion on campaign contributions and $5 billion on lobbying expenses. During this period, the securities industry alone spent $1.7 billion on campaign contributions and $3.4 billion on lobbying. The insurance industry led the lobbying effort by spending $1 billion, largely to repeal any reforms passed since the New Deal.

To put this into perspective, when these campaign contributions are compared to other industries during the period starting in 1989, contributions from the financial services industry alone are greater than the contributions from the energy, health care, defense and telecommunications industries combined.

This is an extraordinary amount. Accordingly, anyone with common political sense would ask why the financial services industry would go to such great and expensive lengths to lobby elected officials and delay all types of financial reform and regulation, if the expected profits from the status quo were not worth defending.

Of course, the rewards far outweigh these tremendous cash outlays. This better explains the essentially confrontational relationship that exists between financial services companies, including mutual funds, and their own customers.

Here’s the Alternative to Getting Victimized

There are an increasing number of financial advisors who have adopted the fiduciary standard proposed by the U.S. Department of Labor. These advisors, many of whom are known as Registered Investment  Fiduciary Standard logoAdvisers, put their clients’ best interests first before the need to sell products. Most investors just assume their adviser is working for their best interests, but this has not yet been adopted as the financial services industry standard.

Many in Congress have adopted the financial lobbyist’s message that adopting the standard of putting client interests ahead of the investment company will prevent people from getting investment advice. This is illogical and has no basis in reality, unless we substitute the words “financial advice” for “sales pitch.”

As Kathleen McBride of the Institute for the Fiduciary Standard writes, the fiduciary debate is at the heart of conflicts-of-interest in the financial advice business.

The Committee for the Fiduciary Standard has also started a petition drive to members of Congress to support the end of conflicts-of-interest when it comes to providing financial advice.

Find a real Registered Investment Adviser who already puts their investor client’s Best Interest First. Yours! Not only for retirement assets, but all the investments they advise or manage for you, on your behalf.

And keep more in your nest egg, not in some sales reps pockets.

More about the Fiduciary Oath.

Here are more places to find a fiduciary, or an advisor who is interested in placing your interests above those of the mutual fund company or bank.

Join 230,000 investors who support the Department of Labor’s rulemaking to eliminate conflicts of interest and require anyone who has the privilege of advising a retirement investor to do so in the investors’ best interests.  Send your comment by July 21, 2015.


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Chuck Epstein has managed marketing communications and public relations departments for major global financial institutions and participated in the launch of industry-changing financial products. He also has written by-lined articles for over 50 publications, five books and served as editor and publisher of nation’s first newsletter on the topic of using the PC for personal investing and trading. (“Investing Online, 1994-1999). He also is a marketing consultant, writer and speaker on topics related to investor protection and opportunities in the very dynamic cannabis industry. He has held senior-level marketing, PR and communications positions at the New York Futures Exchange, Chicago Mercantile Exchange, Lind-Waldock, Zacks Investment Research, Russell Investments and Principal Financial. He has won national awards from the Mutual Fund Education Alliance (MFEA) and his web site,, was named best small blog in 2009 by the Society of American Business Editors and Writers (SABEW).


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