Americans for Annuity Protection Joins Texas Tech in Best Interest Research
Phoenix, Arizona, June 1, 2016: The Department of Labor Conflict of Interest Rule requires financial advisers to act in their clients' best interest and that they be paid not more than “reasonable” compensation. However, the Rule provides little guidance regarding what it means to serve a consumer’s Reasonable Comp Study, explain best practices that help advisors assess best interest, and what criterion of time, expertise, and services help determine reasonable compensation. Most importantly, no effort was made to understand consumer expectations and needs. That is why the AAP Board of Directors has authorized a strategic partnership with Texas Tech University associate professor, John Gilliam, PhD.
“AAP believes the financial services industry and those who regulate it will be helped by a better understanding of what it means to the consumer to be advised in their "best interest" and what factors are important when determining “reasonable compensation,” offered Paul Feldman, AAP Chair and publisher of Insurance News Net Magazine. “Consumers are the most important stakeholder in a best interest standard and they are better served if this intelligence comes from qualitative research rather than court precedence,” Feldman added.
The newly formed Best Interest and Reasonable Compensation Initiative will allow researchers in Texas Tech University’s Department of Personal Financial Planning to study what best interest means from the customer’s and advisor’s perspectives. According to Gilliam “the research will help the industry formulate and define ‘best practices’ and ‘reasonable compensation’ under these important new parameters on financial advisors and, in turn, guide advisor behavior.”
Texas Tech's Personal Financial Planning program is regarded as a key academic thought leader in the financial services industry and is a natural fit to undertake this important research. “Our research will be vital to protect consumers and strengthen the industry,” notes Gilliam.
“We are pleased that AAP has been invited to engage in this effort. The AAP Board had already authorized a Reasonable Compensation Study and joining this initiative is a natural fit for our mission to protect and inform consumers,” says Kim O’Brien, Vice Chair and CEO of AAP.
AAP joins the Society of Financial Services Professionals (FSP) in this important strategic partnership. The initiative is currently seeking additional partners interested in funding this meaningful research.
