Mike Kilburn:

Having a good financial planner can certainly make all the difference in your retirement or every day decisions. We had an opportunity to talk to Phil Ratcliff of Rebel Financial Services about what you should be doing investment wise.

What protection does the consumers have in the financial industry:

Phil:

In the financial industry, there are actually lots of protections because there’s been a very long history of people abusing those that don’t have as an extensive knowledge in the financial world. Especially after the Depression, there were a lot of protections and laws passed, and a lot of those separations between banks and financial institutions existed up until the beginning of this decade when a lot of those were torn down and caused a lot of the problems with the last downturn.

A lot of the ones that people hear of, there’s SIPC, which is Securities Investor Protection Corporation, which is like an FDIC for investments in case a firm goes under or what so, a lot of people’s money is protected by the government.

Then there are the SEC, which is the Securities and Exchange Commission, which is the most powerful and pretty much over top of everything when you look at investments and what so, and then the State Securities because we’ve never really gotten too far from the separation of the Feds versus the States, so they both kind of do the same thing. The States tend to take below $100 million firms, and the SEC above $100 million firms, and those are the actual institutions that audit to make sure to look out for fraud.

Mike Kilburn:

What is a fiduciary?

Phil:

A fiduciary is someone that has a responsibility to do what’s right for their clients before themselves or their firms and really, a lot of us in the industry believe that’s the main protection mechanism that should be out there.

Even the SEC agrees. They’ve been trying to pass a fiduciary standard for 25 years, and all that really means is that someone should be doing what’s right for their clients rather than trying to maximize their own profits. You can make a good living running a business that way.

Mike Kilburn:

Aren’t all companies fiduciaries or is there some that aren’t?

Phil:

No. Most companies actually aren’t fiduciaries, and most companies, when they’re trying to maximize their profits and they employ lots of different people, who knows what any one of those thousands of employees are going to do or say or shortcuts they’re going to take, and so most of the larger companies don’t want to take that responsibility, so in that respect, most fiduciaries you”re going to find actually dealing with retirement plans or what so are going to be smaller companies, what we refer to as independent registered investment advisors, the smaller firms.