Pamela Capalad is only 30 years old but when new clients wonder whether she’s a trustworthy financial advisor, the Brooklyn resident introduces the fact that she has taken a fiduciary oath.
“I tell them that whatever advice I give is completely unbiased, that I always have their best interest in mind and that I don’t take commissions from anyone,” said Capalad who launched her own advisory firm BrunchandBudget.com in 2015.
Financial advisors like Capalad are increasingly finding themselves deflecting doubt and suspicion among new and existing clients.
“People are losing faith because there are numerous designations,” said Nandita Das, a certified financial planner in Dover, Del.
The majority of Americans do not trust financial services providers, according to a recent study that evaluated a range of financial services and providers including credit cards, debt collectors, payday loans and mortgages.
Only 12 percent of Americans believe Wall Street banks and other financial services providers have changed their practices enough to not warrant further regulation.
“Efforts to bring transparency and fairness to personal finance may have begun but these new results signify that our work must continue,” said Mike Calhoun, president of the Center for Responsible Lending (CRL).
Jointly commissioned by the CRL and Americans for Financial Reform (AFR), a national poll found that 66 percent of voters believe that more financial oversight is needed, including 49 percent of Republicans, 63 percent of Independents and 85 percent of Democrats.
Consumers have reason to worry. Some 859,900 consumer complaints have been filed with the Consumer Financial Protection Bureau (CFPB) and $3.4 billion in restitution has been paid to consumers as of March 31, according to the CFPB’s semi annual report.
Das, an associate professor of finance with Delaware State University, believes the lack of confidence in financial services providers by the public will improve as awareness of licensing and certifications becomes more widespread.
“Anyone can call themselves a financial planner but the gold standard is certified financial planner and we need only one standard,” Das said.
Financial advisor Jonathan R. Kelley thinks voters are sniffing in the wrong direction.
“We don’t need more rules that will make this business even more complicated,” Kelley said. “We need more thoughtful and clear regulation of the current rules, which are being enforced very differently depending on the registered rep and broker dealer the client is with.”
Those rules include the Dodd-Frank Wall Street Reform Act and the Consumer Protection Act, which launched the CFPB in 2011 after the 2008 housing crisis resulted in an economic recession.
Juliette Fairley is a business and finance journalist who has written four personal finance books for John Wiley & Sons and has written for major news organizations, such as The New York Times and The Wall Street Journal. She is a member of the American Society of Journalists and the New York Financial Writers Association and a graduate of Columbia University’s Graduate School of Journalism. Juliette can be reached at email@example.com.
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