When Greg Smith famously submitted his Goldman Sachs indictment-cum-resignation letter via the editorial pages of The New York Times, columnists writing in Newsweek, The Wall Street Journal, Forbes and other publications replied with a collective shrug.
The consensus view is that it comes as no surprise that a for-profit firm is in business to make money.
Yet in other circles, Mr. Smith's letter aimed a spotlight at the relationships between financial professionals and their clients. Some fee-only financial advisers cited his letter as evidence for the need for a government-imposed universal fiduciary duty for all advisers.
But the truth is, not all financial professionals are hewn from the same cloth. For instance, members of the National Association of Insurance and Financial Advisors and their colleagues serve clients in their hometowns across the country.
They provide needed financial services and advice to people who lack the resources or desire to work with a multinational investment bank or even a wealth management firm. They are Main Street, not Wall Street.
Nearly 60% of NAIFA members' clients earn $100,000 a year or less, according to research by LIMRA International Inc.
ADVICE FOR THE COMMON MAN
These are schoolteachers, office workers and other middle-income Americans who turn to agents and advisers to purchase insurance, annuities, mutual funds or retirement products. They are small-business owners who rely on agents and brokers for human resources, employee benefits and succession-planning services.
NAIFA members still meet face to face with their clients and speak with them on the phone. Relationships are their business.
They stay in business because their clients grow to trust them, returning for products and services year after year and referring friends, colleagues and family members. Many NAIFA advisers have served the same clients for decades or even across multiple generations within families.
They don't earn that kind of loyalty by not looking out for their clients' interests or by treating their clients poorly. I could argue that a threat to these advisers' reputations serves as a more potent regulator than the Securities and Exchange Commission or any other government agency.
In fact, the SEC has never shown any evidence that our advisers aren't working in the best interests of clients. We don't fear the obligations of a fiduciary duty so much as the added regulatory and cost burdens of a poorly conceived fiduciary rule — burdens that could threaten our business model and make it impossible for us to serve our middle-market clients.
We support regulations to protect consumers. We need them to ensure the integrity of our industry and to protect our clients from less scrupulous people who may not make the same investments in their careers or work as hard as NAIFA members to build trusting relationships.
We just need to make sure that they are intelligent regulations.
That is why it is important that any fiduciary rule imposed on agents or advisers addresses real problems, provides clear consumer benefits and doesn't drive up costs in a way that could deprive middle-income Americans of investment advice and products that have served them well for decades.
It is easy to overreact to charges as inflammatory as those made by Mr. Smith. It is crucial as politicians devise rules and regulations to rein in perceived abuses that they take great care to avoid harming the small-business owners, the schoolteachers, the office workers and everyone else who makes up Main Street America.
Robert Miller is president of the National Association of Insurance and Financial Advisors and a partner at Miller-Pomerantz and Associates.