When Advisors Violate Their Fiduciary Duty

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If you follow the retirement income field, you are familiar with David Blanchett, head of retirement research at PGIM DC Solutions. I first became aware of Blanchett’s work when he was with Morningstar’s investment management group. I’ve listened to him speak at conferences and have read some of his research publications. An adjunct faculty member at the American College, Blanchett is a thought leader and central figure in the retirement income industry.

Recently, Blanchett ignited a controversy when he asserted at the InvestmentNews Retirement Income Summit that advisors breach their fiduciary duty when they fail to recommend guaranteed income products (annuities).

But Blanchett’s view should not be controversial.

I applaud his courage and perspective on this issue, which reflects my own.

Ten years ago, I made a presentation at the annual meeting of the Financial Planning Association. A portion of my talk focused on this same annuity question relative to advisors meeting fiduciary responsibility when it comes to retirement income planning. In the years since, this aspect of fiduciary duty has not advanced much.

In a recent article, I raised the issue again, asserting that duty is breached when advisors fail to recommend guaranteed income to a class of clients I call “constrained investors.” My article elicited a few comments from readers who implied that I was engaging in a disguised effort to market an annuity sales system. More than being untrue, these comments overlooked the substance of my arguments.