Following the post-COVID stimulus hangover in 2022, the bull market has continued to run. One of the key factors was the Federal Reserve’s decision to
Mixed Company
Published Date : November 4, 2013
When Sand Hill launched in 1982, we had one primary objective in mind. At the time, the brokerage industry was evolving from the client-centric model we had known to a sales orientation. Brokerage companies, then as now, are the distribution arm of our industry. We aimed to retain responsibility for assuring our clients could count on us to provide advice and management in a conflict-free, transparent manner. We wanted to be accountable to you, our clients, not to anyone else. I feel very good about what we do. We have a clear mandate, and know where our responsibilities lie.
Sand Hill abides by the Fiduciary Standard, which was created by the Investment Advisor Act of 1940. Fiduciaries take legal responsibility for managing someone else’s money. The Fiduciary Standard is principles-based. We are mandated to put the interests of our clients ahead of our own: a broad standard indeed. We charge a fee for services and sell nothing, thus earn no other compensation, and we are accountable to you.
Today, our high standard of care is under fire. In the backwash of the “Great Recession” and the events that precipitated it, the dialogue in Washington regarding Investor Protection focuses on compromises to that Standard and related governance methodologies. The pressure comes from the impact of gradual budgetary starving of the SEC, which oversees fiduciaries. Additionally, large brokerage firms are lobbying hard to “harmonize” the standards. Their agents operate under the Suitability Standard, which is softer by far than is true for fiduciaries and relies on disclosure of conflicts. They argue that the cost of instituting the higher standard is too great. It is costly, but assures that we maintain true loyalty to our clients.
The SEC oversees the entire industry, plus the securities and products sold. FINRA, the self-regulatory (but not independent) overseer of brokerage entities, reports to SEC. Understanding the wide variety of new investment vehicles introduced in recent years has presented a real challenge for the SEC. Even the companies selling them don’t seem to understand them or the risks they present! Nevertheless, great incremental profitability has been derived from these products. The SEC’s budget has grown, but not at the pace necessary to stay on top of its rapidly expanding mandate.
Meanwhile, brokerages have “blurred” the lines between distribution and fiduciaries by renaming their agents “Advisors,” a term heretofore reserved for fiduciaries. In the past, it was clear to investors that brokers, paid on a commission basis, were selling products. Now titled Advisors, they may even charge a fee. They are generally paid a percentage of fees, plus profitability generated. Many brokers work hard to serve their clients well. They cannot control the “inventory” of or internal pricing of the products they place, but they enjoy the benefits.
We at Sand Hill are working hard to preserve the fiduciary standard of care as well as the manner by which we are supervised and examined – even to the point of proposing new fees payable to the SEC to cover examination costs. Whichever way it goes, we will stand by our commitment to you and all investors who rightfully believe that Advisors should serve their clients’ interests first!
Articles and Commentary
Information provided in written articles are for informational purposes only and should not be considered investment advice. There is a risk of loss from investments in securities, including the risk of loss of principal. The information contained herein reflects Sand Hill Global Advisors' (“SHGA”) views as of the date of publication. Such views are subject to change at any time without notice due to changes in market or economic conditions and may not necessarily come to pass. SHGA does not provide tax or legal advice. To the extent that any material herein concerns tax or legal matters, such information is not intended to be solely relied upon nor used for the purpose of making tax and/or legal decisions without first seeking independent advice from a tax and/or legal professional. SHGA has obtained the information provided herein from various third party sources believed to be reliable but such information is not guaranteed. Certain links in this site connect to other websites maintained by third parties over whom SHGA has no control. SHGA makes no representations as to the accuracy or any other aspect of information contained in other Web Sites. Any forward looking statements or forecasts are based on assumptions and actual results are expected to vary from any such statements or forecasts. No reliance should be placed on any such statements or forecasts when making any investment decision. SHGA is not responsible for the consequences of any decisions or actions taken as a result of information provided in this presentation and does not warrant or guarantee the accuracy or completeness of this information. No part of this material may be (i) copied, photocopied, or duplicated in any form, by any means, or (ii) redistributed without the prior written consent of SHGA.
Video Presentations
All video presentations discuss certain investment products and/or securities and are being provided for informational purposes only, and should not be considered, and is not, investment, financial planning, tax or legal advice; nor is it a recommendation to buy or sell any securities. Investing in securities involves varying degrees of risk, and there can be no assurance that any specific investment will be profitable or suitable for a particular client’s financial situation or risk tolerance. Past performance is not a guarantee of future returns. Individual performance results will vary. The opinions expressed in the video reflect Sand Hill Global Advisor’s (“SHGA”) or Brenda Vingiello’s (as applicable) views as of the date of the video. Such views are subject to change at any point without notice. Any comments, opinions, or recommendations made by any host or other guest not affiliated with SHGA in this video do not necessarily reflect the views of SHGA, and non-SHGA persons appearing in this video do not fall under the supervisory purview of SHGA. You should not treat any opinion expressed by SHGA or Ms. Vingiello as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of general opinion. Nothing presented herein is or is intended to constitute investment advice, and no investment decision should be made based solely on any information provided on this video. There is a risk of loss from an investment in securities, including the risk of loss of principal. Neither SHGA nor Ms. Vingiello guarantees any specific outcome or profit. Any forward-looking statements or forecasts contained in the video are based on assumptions and actual results may vary from any such statements or forecasts. SHGA or one of its employees may have a position in the securities discussed and may purchase or sell such securities from time to time. Some of the information in this video has been obtained from third party sources. While SHGA believes such third-party information is reliable, SHGA does not guarantee its accuracy, timeliness or completeness. SHGA encourages you to consult with a professional financial advisor prior to making any investment decision.
Recent Posts
