Investors would benefit from bill

By Richard Munk

Thursday, May 4, 2017 | 2 a.m.

Senate Majority Leader Aaron Ford recently presented Senate Bill 383, a measure aimed at ensuring financial planners, advisers and broker-dealers are required under law to put the interests of their clients first when investing their savings. This requirement is commonly known as the Fiduciary Rule.

This bill should clear the Legislature and be signed by Gov. Brian Sandoval with ease, but of course everything changes when money enters the picture. The bill made it out of the Senate, but without the support of a single Republican. This perplexes me.

I have spent the last 37 years as a professional insurance agent specializing in, but not limited to, coverage for seniors. Most people have no idea what the word fiduciary means and may not understand that SB 383 is a bill to protect their hard-earned retirement from less-than-ethical broker/dealers and people who give investment advice. I have personally met many seniors who have been taken advantage of by unethical broker-dealers, either losing their retirement funds or being steered into investments that benefited the broker-dealer more than the client.

In its simplest form, fiduciary means “a level of trust.” An accountant operates as a fiduciary. A title company operates as a fiduciary. Your bank operates as a fiduciary. In most states an insurance agent operates as a fiduciary. You trust that they will do right where your finances are concerned. Fiduciaries are held to a higher standard because you trust they will not do you any harm when dealing with your money.

At the federal level, a new fiduciary standard was supposed to go into effect this month that would have made SB 383 unnecessary. Unfortunately, the Trump administration halted the scheduled implementation of this new standard. Now it is up to the state of Nevada to protect our seniors from irresponsible investment advisers and broker-dealers.

Is SB 383 really necessary? You be the judge. Not too many years ago, I met with a prospective client, age 77, who had gone to a financial adviser/broker when she retired at age 62. He advised her to put 100 percent of her liquid assets into the stock market. She started with $106,000 at age 62, and now had $142,00 in her account at age 77. Her return on investment in 15 years amounted to just over 2 percent per year. Her financial adviser/broker however, had made well over 5 percent per year in fees from her money. He made $85,000 from her investments by churning her account, and she made $36,000. Nice work if you can get it. Was he acting in her best interest?

This example is not an isolated incident; I could provide many more. This type of abuse is happening every day to elderly people all over the country who are not protected against those who would take advantage of their lack of financial acumen. Sen. Ford’s bill will change that by putting financial advisers and broker-dealers under the same fiduciary rules as financial planners. Isn’t it time that financial planners, advisers and broker-dealers be required to put their client’s needs before their own? I believe it is, along with countless Nevadans who deserve to have their hard-earned savings protected.

Richard W. Munk is a Las Vegas resident.