Inspired by Knut Rostad's idea of writing the equivalent of "Fiduciary for Dummies," I wrote a series of articles last fall meant to explain the meaning of fiduciary in layman's terms. (For a flavor of those, check out the first one, titled, "How Walt Disney Showed Us What the Fiduciary Duty of Loyalty Means to Investors," FiduciaryNews.com, September 11, 2012). Still, these articles only went to institutional readers, not the lay readers a generic advertising campaign might target.

Sure, fiduciary advocates have talked of creative ideas – everything from a "Saturday Night Live" skit to a Superbowl ad. But the same obstacle kept coming up – money. It costs money to produce the kind of quality advertisement people will pay attention to. No single group advocating the fiduciary standard has that kind of money in the budget. 

Then along comes E-Trade.

Perhaps I'm not being fair. With New England already pulling away (as a Buffalo Bills fan, I just can't cheer for the Patriots), I was already predisposed to get angry. So, while Tom Brady might have brought me to the edge, the E-Trade add pushed me over.

There it was. Right in front of my eyes. In brilliant 1080i high definition. In 5.1 surround sound. There was the fiduciary ad we wanted. It told everything we wanted to tell about the advantages of being a fiduciary – and it didn't even have to use the word "fiduciary."

There was only one problem. The ad wasn't made by a fiduciary, it was made by a broker. There was another problem: The very same language fiduciary advocates have used to promote the fiduciary standard was used within the (implied) framework of the suitability standard. 

Yes, the ad suggested there was a conflict of interest in selling "proprietary" funds. Yes, the ad promoted the power of "independent" advice. It touched all the appropriate hot buttons. And, in doing so, it only made the case for the fiduciary standard more difficult to explain. It muddled the advantages of the fiduciary standard by redefining these hot buttons.

A "proprietary" fund can be bad, as in high fees and poor performance, but this is only the case when it sold by a broker (as opposed to the shareholder buying from the fund directly).

In fact, studies (see "Does New Study Seal the Deal for Fiduciary Standard – or Just Warn Plan Sponsors?" FiduciaryNews.com, January 18, 2011) don't use the term "proprietary," they use the term "broker-sold." It is the broker-sold funds that contain the higher fees and yield the poorer performance and are rife with conflicts of interest. The term "broker-sold" applies to any type of fund, not just "proprietary" funds.

And the last time we checked, E-Trade was a broker. In fact, its own literature states: "E-Trade has contracted to receive other compensation in connection with the purchase and/or the ongoing maintenance of positions in certain mutual fund shares in your brokerage account." (see "View Commissions & Fees" page downloaded from E-Trade site on January 16, 2013).

It is this very brokerage relationship that nullifies any claim of independence on the part of E-Trade and any other brokerage firm.

And that independence, my friends, is what the meaning of fiduciary is all about. 

I don't begrudge E-Trade for its business model or for its desire to compete with the big boys in the brokerage industry. In fact, I am delighted they do what they do.

It's just, when it comes to messin' with my beloved fiduciary standard, well, let's just say Dante would have reserved a special seat for E-Trade in the first cantica of his famous "Divine Comedy" trilogy.

The one right next to Bill Belichick.