During the debate over the Department of Labor and Securities and Exchange Commission‘s so-called Fiduciary Rule, firms fighting the fiduciary standard made many arguments against being forced to comply with a fiduciary standard. One of their arguments was that without commission-based sales people, low and middle income consumers would not have access to a financial advisor.

This argument is everywhere. For example:

In “Adviser group tells SEC small investors would be hurt by fiduciary standard,” an Investment News senior reporter writes, “Middle-income investors would be harmed… . …43.9% of the respondents would pass on the higher costs to their clients by imposing or increasing fees, while another 48% said they would limit their practice to clients with a minimum amount of assets.”

In “The Consequences of the Fiduciary Rule for Consumers ,” a director at American Action Forum claims, “…it is important to drill down to what this rule and its unintended consequences will really mean for consumers, especially low and middle income consumers who benefit most from retirement advice. …the fiduciary rule has the potential to increase consumer costs by $46.6 billion, or $816 annually per account… . Worse, based on a minimum balance requirement of $30,000, the fiduciary rule could force 28 million Americans out of managed retirement accounts completely.”

In “New Evidence of Fiduciary Rule’s Harm, Chamber Report Says ,” a ThinkAdvisor article quotes, “A consistent set of themes emerges from the compilation of this data: small-dollar investors will lose out if this rule goes into effect. They’ll either be dumped from their plans, they’ll have fewer choices with less advice, or they’ll be subject to a more expensive advisory relationship that may not be the right option for them.”

In “New Fiduciary Rule For Financial Advisors Moves The Needle, But In Which Direction? ,” a professor publishes at Forbes, “Some opponents of the rule argue that this reduction in services will most dramatically affect low-wealth and middle-wealth consumers who could be priced out of the market. … Most low-income individuals do not receive any advice from financial planners today, so the change likely presents a more serious risk for middle-wealth America.”

In “Feds proposed fiduciary rule: Will it help or hurt? ,” a MarketWatch staff writes, “Lower and middle-income investors will be hurt the most if the regulations go into effect as proposed, critics argue. These are the consumers without the hefty account balances required to engage a registered investment advisory firm, which typically charges an annual fee of 1% of assets under management.”

In “This new conflict-of-interest rule will push ‘bad eggs’ out of the financial industry ,” a MarketWatch columnist says, “The critics will say that …investors would pay more for advice, that fewer investors would be able to access advice, that there would be fewer advisers, and so on.”

The commission-based argument against following a fiduciary standard is that following the fiduciary standard would cost them too much money. If it costs them too much money, they say they would limit their financial planning advice to clients that have assets sufficient to make it worth their while. If they raised their minimums, then tens of millions of Americans would be without any financial advice.

Missing from all of these arguments are two facts.

First, most commission-based so-called advisors are acting under an exemption that claims the only advice they offer is advice which is incidental to the job of selling investment products. Consumers would hardly miss incidental advice. And with commission-based salespeople they are not even guaranteed that their so-called adviser is acting in their best interests. It could very well be that tens of millions of consumers would be better off without the sales pitches that they are currently receiving.

Second, technology continues to make providing advice to a large number of clients better, faster, and smarter. There are computer technologies which can take an advisor’s investment philosophy and automate implementing that philosophy across thousands of portfolios.

I have always thought that every consumer would do better seeking advice from a competent fee-only fiduciary advisor. And I believe that the arguments of the commission-based world will prove to have been completely fallacious. We have been proud to be part of the National Association of Personal Financial Advisors (NAPFA) all of whose members are distinguished by being competent by having a CFP®, compensated only from client fees, and comprehensive in the financial planning they offer.

And while in the past our firm specialized in a very high level of comprehensive service for high net worth clients, I took comfort in the fact that other NAPFA firms were specializing in less sophisticated planning and investment management for smaller clients.

Now, Marotta Wealth Management has lowered our minimums to zero and offers fee-only investment management to all consumers, low and middle income included. This new service level provides a set of basic investment management services for a low flat 0.4% cost. There are also optional bonus services for an additional planning fee. Investors are encouraged to do as much as possible themselves and are guided through many aspects of financial planning as part of an exclusive do-it-yourself newsletter.

Investing and rebalancing begins when an account has at least $5,000. At $5,000, Marotta receives 0.4% or $20 per year charged as 0.1% or $5 per quarter.

There is no sales pitch nor do we have any sales personnel. We assume that clients who are interested in this program will sign up of their own accord.

At these low fees, even the process of becoming a client is online and automated. The first we know of a client is when they sign up for a Schwab account online and enter our advisor program key.

At these low fees, we are relying on clients to do most of the administrative work themselves. We rely on clients being able to open their own accounts and transfer their own assets. While we prefer clients save money and handle as much as possible themselves by following instructions, clients can seek our assistance for everything from paperwork preparation to qualified charitable distributions for an additional planning fee.

This is our answer to the claim by the commission-based world that fiduciary investment management can not be offered at a reasonable price: It can. We have.

If you are interested in our Do-It-Yourself service, simply follow these instructions to get started.

Photo by Daniel Hjalmarsson on Unsplash