The F word war

I would like to respond to recent comments of Sallie Krawcheck, chief executive of Citigroup Inc.'s global-wealth-management division, as quoted in "Krawcheck: Accept the F[iduciary] word" (InvestmentNews Daily, Nov. 8.). She is quoted as saying, "The [brokerage] industry has been uncomfortable with the F word," but the fear of taking on fiduciary liability is "not rational ... It's what clients tell you they want."  Ms. Krawcheck is further quoted as saying that the Denver-based Financial Planning Association might "lose the war" after winning its lawsuit against the Securities and Exchange Commission. I applaud her position of having those who advise clients accepting a fiduciary responsibility. Ms. Krawcheck is recognized as an individual with a reputation for integrity, and we welcome anyone who, as we do, supports serving the client's interest first when one gives investment or financial planning advice to the public. It's not clear to me, however, what war she is talking about. Our lawsuit was against the SEC over a rule that excepted brokers from a fiduciary requirement when offering the same services provided by financial planners, not against Wall Street. Many of our members work for Smith Barney of New York and the wirehouses and supported our lawsuit, not because they were at war with themselves but because they recognized their fiduciary role that their clients deserve, or, as Ms. Krawcheck so aptly noted, "it's what clients tell you they want." She also was quoted as saying that she thought the "Street would have seen the lawsuit for what it was — a fantastic opportunity to expand the securities business into the fiduciary model." We see that as the correct way to serve the public, if we are applying it under the same standards. What she didn't say was that before the court decision, some firms, including wirehouses, were giving away free financial plans by their registered reps and avoiding a fiduciary duty while marketing themselves as trusted advisers. This is an unacceptable practice, and one we will vehemently oppose. Financial planning, whether comprehensive or one of the subsets thereof, needs to be done with the same fiduciary responsibility Ms. Krawcheck is proposing firms accept for other activities. Now that she and others on the Street are embracing a fiduciary duty for financial advisers — and we are delighted that they are — it is important now not to just talk the talk but walk the walk as true fiduciaries. If this happens, then the FPA would be more than happy to lose whatever 'war' Ms. Krawcheck is referring to and work with all to build a new model for the future, serving the public through a universally accepted fiduciary structure adhered to by those in financial services capacities who give advice. In the meantime, we will continue to speak strongly about our belief that we should serve the client's interests first with respect to this issue. Nicholas Nicolette, CFP President Financial Planning Association