Phil Cannella educates hundreds of Philadelphia-area retirees each week at Crash Proof Retirement educational events. Phil Cannella arms attendees with truth backed up by statistics, charts and taped interviews with some of the most important financial authorities in the United States.
But perhaps the most important thing Phil Cannella does at these events is to ask attendees one simple question:
“Have you ever heard of a fiduciary responsibility?”
Over the year, Phil Cannella has found that many people do not understand the concept of fiduciary responsibility. That’s because, quite simply, they take it for granted.
By definition, a fiduciary duty or responsibility is a legal duty to act solely in another party’s best interests. The concept is simple enough for anyone who works as a CPA, a lawyer, a police officer, a school teacher, an insurance professional, a doctor… any licensed professional.
But Phil Cannella points out that there’s an exception to each rule. In this case, it’s Wall Street. Wall Street brokers and securities advisors are not required to operate under a fiduciary responsibility.
“This is the foundation of the illusion of Wall Street,” Phil Cannella explains.
When you go to a doctor, he or she is obligated to give you the best possible medical advice. Otherwise, what’s the purpose of going to the doctor?
But when you put your hard-earned money into the market, Wall Street brokers and advisers aren’t required to disclose many important facts that might make you think twice before investing.
On the flip side, Phil Cannella is celebrating his 40th year in the insurance industry—‘the brickhouse industry,’ he likes to say—which requires a fiduciary responsibility of its professionals. Rather than simply determine if a product is suitable for a client—as they do on Wall Street—Phil Cannella prefers to document everything. “Get it in writing,” he always says.
If an insurance professional misleads, misrepresents or conceals any part of the truth, he or she can lose their insurance license. That’s the beauty of a fiduciary duty. And as far as Phil Cannella is concerned, it’s the only way to do business.
How can an advisor with no fiduciary responsibility work in the best interest of you, himself and his firm all at once? And if he tries, with ongoing fees and commissions to consider, consumers find themselves as the low man on the totem pole.
So after Crash Proof Retirement educational event attendees have the chance to consider the role that fiduciary duty plays in our most storied and trusted professions—and the fact that Wall Street operates without any such obligation—Phil Cannella concludes his explanation the same way he begins it—with a question.
“How can you tell the difference between sound financial advice and a sales pitch?”