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Steering

 
 
gollum
 
Reply Tue 15 Mar, 2016 10:54 am
I read AIG will pay $9.5 million to settle allegations it steered clients toward more expensive mutual fund share classes in order to earn more fees.

What makes this practice illegal? I thought salesmen routinely try to persuade the customer to buy the higher price model.
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Type: Question • Score: 2 • Views: 769 • Replies: 5
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roger
 
  1  
Reply Tue 15 Mar, 2016 01:07 pm
@gollum,
Possibly it relates to some fiduciary duty to act in the clients' best interests. If so, this particular case sounds wonderfully easy to defend. That's not a legal opinion, but best interest in this sounds very open to interpretation.
gollum
 
  1  
Reply Tue 15 Mar, 2016 02:47 pm
@roger,
roger-

Thank you.
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Linkat
 
  1  
Reply Tue 15 Mar, 2016 03:22 pm
@gollum,
Working in the financial field and knowing many financial planners and advisers I understand this is illegal. Financial planners and advisers are certified - they need to take and pass various tests. They are under a legal obligation to do what is best for their client financially not best for the company or companies they represent. They are more than salesmen, they are advisers and one relies on them to be an expert.

You wouldn't for instance expect a doctor to recommend a procedure to cure your medical problem because it earns them more money when there is one that is less risky, better suited for your health?

Similar to financial advisers - as you rely and should be able to trust their advice.
roger
 
  1  
Reply Tue 15 Mar, 2016 03:45 pm
@Linkat,
You'd just be surprised about what I expect from the medical community. My own doctor seems an exception, but I've come to expect unnecessary follow up visits and referrals. Hard to define 'unnecessary', but after a few years you are entitled to an opinion.

I do agree on the legal obligation of both doctors and financial advisors.
cicerone imposter
 
  1  
Reply Tue 15 Mar, 2016 03:53 pm
@roger,
Not long ago, there was a tv show on a doctor doing unnecessary cancer surgery on patients that didn't have cancer. No matter what the 'profession,' consumers must be vigilant to make sure the service provider is the real thing and meets the standards of practice and laws.
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