Deena Katz, Texas Tech University, Evensky Katz Wealth Management

I’m Deena Katz, Associate Professor at Texas Tech University and Chairman of Evensky & Katz Wealth Management.

It’s a new world. After many years of negative returns, the past year of significant recession, and an unprecedented array of investment scams and fraudulent activities, we are now in a new world, a regulatory world that will set off a sea change of events like we have not seen in our lifetimes.

Be prepared. The latest draft of the Investor Protection Act of 2009 makes it clearer that the SEC must adopt rules setting a fiduciary standard for advisers and brokers providing investment advice to retail investors. It now states that the standard of conduct “shall be to act in the best interest of the customer without regard to the financial or other interest of the broker, dealer, or investment adviser providing the advice.”

Most people, who are afraid of accepting fiduciary responsibility with regard to the client relationship, interpret “fiduciary” in purely legal terms only. They worry about litigation in being held to a “trust” standard. They explain that they cannot be an agent of their firm and a fiduciary to their client. But, if we look at the FPA’s Standards of Care, there are five simple statements, that considered separately, are nearly impossible for anyone to raise serious objections:

1. Put the client's best interests first.
2. Act with due care and in utmost good faith.
3. Do not mislead clients.
4. Provide full and fair disclosure of all material facts.
5. Disclose and fairly manage all material conflicts of interest.

This, my friends, these are the definition of Fiduciary.

As you look toward 2010, remind yourself that in this New Regulatory World, we will be regulated. If you want to have a voice in that, contact your local representatives, volunteer and support advocacy at FPA. And finally, remember, all professions are regulated. And, we are a profession.

If you'd like to hear more of my thoughts, I write a regular column in Financial Planning magazine.