Fiduciary (fih-DOO-shee-er-ee) n. Law. One who manages investments for the benefit of others—legally obligated to act in their best interest.

The biggest whopper I heard at a recent retirement seminar was that stockbrokers are afraid to act against the investor’s best interests when dealing with their IRAs and 401Ks. Why? Supposedly because they have vowed to act as “fiduciary agents.”

This is a sad joke. Perhaps my explanation will save you a bundle.

To be fair, the seminar’s leader seemed to mean well. Of course, to earn commissions as a salesman, he must at leastappear to mean well. And he may have believed what he implied: that salesmen who manipulate investors into purchasing unsuitable investments typically face serious consequences.

Perhaps he has never seen the inside of an *NASD or *FINRA arbitration. Well, I have.

It is a viper pit. And, in that scheme of things, the aggrieved investors are mice. Frankly, I have seen friendlier faces in TV lynch mob scenes than on NASD panels, whose members knew good and well that if they wanted to serve on more panels, they had better remember that the brokerages butter their bread.

To bring yourself up to speed on my campaign to warn you against stock brokerages, please see my series of Serpent articles, particularly installments 37 and 11, posted at

What you must understand is that the investment industry is not geared to strategically foster your long-term goals. Instead, it is devised to exploit your short-term inclinations toward fear and greed.

Are you afraid of missing surefire opportunities to outpace inflation’s erosion of your purchasing power? Are you greedy enough to suppose you can earn double-digit returns without risk?

The fiduciary’s vow to act with your best interests at heart does not mean, “I work for free.” He must feed his family even when doing so means shoehorning you into a less-than-optimal investment.

And his brethren at FINRA and the NASD care more about him than about you—all while the bumblers at the SEC ignore the feeding frenzy.

Experts like Scott Burns and Daniel Solin agree that:

  • There’s no better financial investment than paying off your debts.
  • You should have six months worth of income in the bank before investing.
  • Paying interest while trying to earn money by investing is full of folly.

In his recent article, “Passivity Wins in Meltdown,” Burns observes, “It has been painfully demonstrated that Wall Street is populated by witless greed freaks.” It is mandatory that you become well informed rather than trusting blindly.


  1. NASD: Being an industry organization, the National Association of Securities Dealers has been accused of turning a blind eye to broker/dealers’ biggest abuses.
  2. FINRA: The Financial Industry Regulatory Authority is a self-regulatory organization… successor to the NASD.