I’ve gotten some push back on my recent post on the relative value of financial literacy education versus a strict, universal fiduciary standard. One criticism that rings true is that financial literacy education deals with a much broader, and you can argue more important, range of issues besides investing. Granted.

Nor would I argue against efforts to do more financial literacy education. Despite the mixed results shown in the research, more education is better than less.* That being said, let me provide you an analogy that I thought of since publishing the original post.

The vast majority of Americans own a car and therefore have to hit the gas pumps on a regular basis. Every time you go to the gas station you are likely to see a sign or decal that that says – “Do not top off”:

Source: Clark

Do you need to understand how topping off can damage your car’s vapor collection system? No.

Do you need to know that topping off can release gas vapors into the environment and your lungs? No.

Did you know that extra gas you paid for is just going to go back in the station’s tanks? No.

All you need to know is that when the gas pump clicks, you are done filling your tank. Period. The vapor collection system is there to benefit everyone. You don’t need to understand how it works, to get benefits from it.

The same is true with a universal fiduciary standard. If everyone is legally working on behalf of the best interests of their clients, we are then all on the same page. Will some rogue fiduciaries try to “top off” their client’s portfolios? Surely, but at least better guardrails will be in place and their actions will be all the more obvious.

*I could argue I have spent the past twelve and half years on this blog doing exactly that – teaching financial literacy.