| Today, I attended a National Association of Personal | | | | Department is. Most financial advisors do not accept a |
| Financial Advisors (NAPFA) study group revolving | | | | fiduciary responsibility to their clients. These financial |
| around ethics. Our guest speaker was Connie | | | | planners are held only to a suitability standard, meaning |
| Nowland, who is the Market Conduct Examiner for the | | | | they must make recommendations that are suitable |
| State of Utah Insurance Department. | | | | for their clients (a dramatic difference from always |
| Mrs. Nowland shared many cases that intensify how | | | | doing what is best for clients). I always took comfort in |
| proud I am to be a fee-only financial advisor who | | | | knowing that consumers at least had regulatory |
| accepts a fiduciary responsibility to always act in the | | | | agencies keeping a close eye on these salesman, but |
| best interest of my clients. Everyone has heard these | | | | here is the real shocker: according to Mrs. Nowland, |
| types of stories: the insurance salesman who | | | | the State of Utah has never prosecuted anyone for |
| convinced a couple in their 70's to take out a home | | | | violating the suitability standard. Regulators are simply |
| equity line of credit on their paid-off home so they can | | | | too understaffed to enforce these compliance issues. |
| purchase the annuity he was selling (the couple has | | | | Clearly, a home equity line of credit was not a suitable |
| now lost their home), or the annuity salesman who | | | | recommendation for the couple in their 70's, but the |
| sells products with a 22-year surrender period | | | | insurance salesman who took advantage of these |
| attached to them, completely removing the liquidity | | | | people was never punished for making an unsuitable |
| from the investment. | | | | recommendation! This would suggest that although |
| (On a side note, Connie made clear that Utah State | | | | most financial planners and consumers believe |
| Law changed in 2002 making it illegal to sell an annuity | | | | regulatory agencies will ensure the advisors they work |
| with a surrender period exceeding 10 years and the | | | | with are acting within the law, the current environment |
| surrender charge must decrease by at least one | | | | is accurately described as "buyer beware." |
| percent per year. Thus, if anyone tries to sell you an | | | | Consequently, it is more important than ever to work |
| annuity that doesn't meet these requirements, | | | | with an independent fee-only financial advisor who |
| REPORT THEM!) | | | | gladly accepts a fiduciary responsibility to always act in |
| However, the most alarming news communicated in | | | | the best interest of their clients. |
| the meeting is how understaffed Utah's Insurance | | | | |