Despite dire warnings from within his own industry that establishing a national uniform fiduciary standard will be costly, many registered financial advisors such as Jim Beaulieu continue to support the idea.  At the behest of the Securities and Exchange Commission spring 2013, Schwab Advisor  Services surveyed 843 firms in May 2013 in an effort to determine the cost of harmonizing fiduciary requirements across all aspects of the financial services industry. Schwab provided a conservative, yet startling estimate of $174, 560 per registered investment advisor for the first year of compliance to a uniform standard. With 10,500 currently registered investment advisors in the United States, that’s a whopping $1.83 billion.

No one is embracing these numbers. Yet, Beaulieu, president of Jim Beaulieu Financial Services LLC, said he thinks the time has come for a uniform standard to be established.

“It will be better for the industry and better for clients,” Beaulieu said. “We, whom are registered investment advisors are upheld to the fiduciary standard. I think people who are charging fees for the business they conduct on behalf of others should be held to that same standard and I would help that it does become law.”
He concedes he’s unsure a law will be passed.

“There are a lot of forces pushing back in the other direction,” he said.

In that same Schwab report, estimates provided by the Securities Industry and Financial Markets Association for potential cost for broker-dealers to comply with a uniform fiduciary standard were significantly higher than the RIA side. Estimates were up to $5 million per firm for fiduciary standard compliance. Of the 18 firms surveyed, the average estimated cost was $2 million. These same 18 firms indicated spending an average of $4.6 million in July 2012 to comply with the Financial Industry Regulatory Authority’s suitability Rule 2111, which requires a firm’s employees to determine if a particular financial transaction is suitable for a specific client.

Compliance costs in general already segment Beaulieu’s industry. Investors with small accounts are getting squeezed out.

“When I started in the late 1980s, you could help a small investor that had only $50 a month to invest. But now, it really isn’t possible to help that person. Unfortunately, it has just become too expensive in our business to help somebody like that,” Beaulieu laments. “That is part of the negative that has happened from regulation.”

Beaulieu began his career directly out of college working for a broker-dealer in a bank setting. He started his own firm in 1997 using the services of an independent broker-dealer. His firm quickly moved toward total financial planning and wealth management and he decided to severe ties with the broker-dealer and become a registered investment advisor.

Today he enjoys posing questions such as the following to his clients: “At age 45, are you happy with the outcomes of the decisions you made at age 25? How happy do you think the age 65 you will be with the outcomes of the decisions you at age 45 are getting ready to make? Will they be thanking you for that decision or will they be upset with you?”

Beaulieu uses a hybrid investment approach creating portfolios with diversified access into various market asset classes. He likes EFTs for their low cost but shies away from alternative investments stating he’s just seen too many of them go wrong.

“Our approach to investing is both passive and active but most definitely based on asset class investing in an effort to put together portfolios that are suitable for a client with a reasonable expectation of returns based on what we are looking for in the numbers needed to fulfill their financial plan.”

Learn more about Jim Beaulieu Financial Services LLC based in Somers, Connecticut online at www.jimbeaulieu.com