Are You a Smart Consumer of Financial Advice?

In listening carefully to the commotion coming out of Washington, one is able to find occasional bursts of sanity. I would direct your attention to all the talk about regulating the financial services industry. This talk goes way beyond the Bernie Madoff mess and speaks directly to the avalanche of complaints from people on Main Street, people just like you and me. These complaints include repetitive allegations of abusive mortgages, abusive credit card rates, abusive bank fees and abusive investment financial product sales practices.

So how can a consumer of financial advice, especially financial products, take action to prevent the word “abusive” from being applied to their transaction?

The answer lies in one specific word being used in the proposed legislation: Fiduciary. The dictionary defines this word, derived from the Latin word for faithful and when used as a noun, as a person to whom property or power is entrusted for the benefit of another. This is the very word that members of Congress want inserted into the new Financial Reform legislation. In other words, when someone asks for financial advice, if the person giving that advice receives compensation, the advice MUST be in the best interests of the buyer. Who is Portafina

This is a pretty radical concept, eh?

So how can the average person apply the fiduciary concept to everyday transactions with real estate agents, investment advisors, insurance agents and bankers? How can a person make sure the purveyor of some product or service is really serving the customer’s needs first and foremost? This doesn’t mean the seller can’t make a profit. It just means the seller can’t make a profit at the expense of the customer. I think you’ll agree, this is a pretty simple concept.

Here is the answer: Type up the following Pledge and ask the person you’re about to do business with to sign it. If they sign, you’re good-to-go. If they won’t sign it, just go.

 

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