In contrast, the advisor description stated: “By law, if you open an advisory account, we must give you fiduciary advice in your best interest at all times.”
The Fiduciary Institute’s sample also makes it clear that brokers don’t work directly for investors: “We represent issuers or underwriters (called “manufacturers”) who sell financial products. We do not represent you. Our relationship is three parties: manufacturers, ourselves, and the customer.”
What about brokers’ conflicts of interest? “Because manufacturers pay us to sell financial products to you, we have built-in conflicts that may influence our recommendations to you,” the sample CRS said.
Under the advisor column, the form stated, “When we are paid fees just by you, we don’t have conflicts with manufacturers. If we have a conflict, we’ll explain it so you can understand it. You can decide if you want to work with us.”
Rostad said he has not talked to SEC Chairman Jay Clayton but hopes he will take the call for an overhaul of the consumer disclosures “under advisement.”
In September, the AARP, CFP Board of Standards, Consumer Federation of America and Financial Planning Coalition jointly released new research detailing investor confusion with the CRS and called on the SEC to professionally test and rewrite the disclosures.