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Why Middle Class Investors Get Poor Financial Advice

Friday, September 27, 2013 - 8:41 AM
From The Fiscal Times:
If average Americans haven't been kicked around enough this past decade, now we have this: the middle class is serving as a pawn in Wall Street's high-stakes lobbying battle against stricter rules for brokers.

The fight centers on the so-called fiduciary standard under consideration at the U.S. Securities and Exchange Commission and the Department of Labor. It would require financial advisers to put the interests of their clients above their own. Some advisers - mostly those who charge their clients fees and don't collect commissions - already are fiduciaries.

The standard would pose big problems for stock brokers and insurance agents who get paid mainly on commission and currently aren't required to sell the cheapest and best product available in the marketplace. They contend that if they had to adhere to a strict fiduciary standard - in other words, recommending better and less expensive products - they'd simply stop serving lower-end clients and focus on the higher end, where they presumably could make up the difference with a new business model.
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According to the article, middle-class households aren't getting much advice even from fee-only financial planners.  Instead they are simply being sold products. 
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