One of the many provisions of the July 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act was the creation of the first new federal regulatory agency in a decade, the Consumer Financial Protection Bureau (CFPB), which consolidates most federal consumer financial protection authority in one place. Now approaching its first anniversary, the CFPB’s stated mission is: “to make markets for consumer financial products and services work for Americans.” Dodd-Frank and the CFPB cover a lot of ground, but the law punted on one issue that is near and dear to me: the concept of a “fiduciary standard.” The fiduciary standard requires financial professionals to act in the best interests of their clients. You may think that your broker or insurance agent is obligated to do so now, but they are generally held to a much looser standard, called “suitability.” In other words, the product they are selling needs only to be suitable for you, rather than in your best interests. See CBS News report here.
