Other firms had adopted variations of “financial advisor” that create a similar fiduciary impression, according to the CFA. For example, Schwab, Hilliard Lyons and Stephens all use “financial consultant” as a title for their professionals. Hilliard Lyons also designates its professionals as “chartered wealth advisors.” Voya uses the title “retirement consultant,” USAA uses “wealth manager” and Prudential uses the title “retirement counselor.”
Broker-dealer websites typically describe their services not as simply product sales, but as the provision of investment advice and retirement planning. The CFA was unable to identify any description of a broker-dealer serving as an arm’s length investment sales business.
In its report, the CFA pointed out that as recently as Aug. 24, the Wells Fargo Advisors website featured phrasing emphasizing “financial advisors” who offer clients a goals-based approach to holistic financial planning. At the same time, Schwab’s homepage advertised that its financial consultants would help consumers “create a plan” tailored to their needs.
The websites also included marketing messages intended to convince retirement savers that their advisor will be looking out for their best interest.
For example, Stifel’s “Statement of Commitment” to its clients pledged to put “the welfare of clients and community first.” On its “values” page, Raymond James not only promised that its professionals will “make decisions in the best interest of their clients,” it also stated “our clients always come first” in bold letters as the first element of its mission statement.
When the CFA analyzed filings challenging the DOL rule made by the U.S. Chamber of Commerce, the Financial Services Institute, the Financial Services Roundtable, the Insured Retirement Institute, the American Council of Life Insurers and the National Association of Insurance and Financial Advisors, they found a very different portrayal of broker-dealer business practices.
According to the trade organization filings, broker-dealer reps were “salespeople” engaging in activity “whose essence is sales.”
According to the report, many “transaction-based financial professionals” employed by broker-dealers and insurance companies present themselves as fiduciaries—“trusted advisors” who are required to act in their client’s best interest—however, clients cannot hold such “advisors” legally accountable for meeting that standard.
Such conflicts cost Americans $17 billion a year or more, according to the report.
The CFA also cites a Public Investors Arbitration Bar Association study that found stark differences between the ways financial firms market their services—as advice given in the best interest of the client—and the defense these firms mount against customer claims in arbitration: that they only act as sales people who cannot be held to such stringent standards.