Recent federal regulations make it more important than ever to have a truly independent Financial Advisor working for your local government when issuing bonds. Some municipal officials mistakenly think that an underwriter or bond counsel is serving that purpose. However, only registered “Municipal Advisors” (the term used by the feds to refer to financial advisors) have a federal fiduciary obligation to put your local government’s interest first!
Broker-dealers and underwriters sometimes act as “financial advisors,” but often have numerous conflicts of interest that can result in the local government paying significantly higher interest rates. Even the most experienced city manager or city clerk can make the mistake of thinking all “bond officials” are the same.
So … how can a city clerk, city manager or finance officer ensure that they have hired a truly independent Financial Advisor? Fortunately, the MSRB (Municipal Securities Rulemaking Board) has a list that identifies Municipal Advisors who are ALSO broker-dealers that may have conflicting interests. To review the list, click the AdvisorCheck button.
For more information, call or email Larry Kleeman (who happens to be a truly independent Financial Advisor, as well as a Municipal Attorney — and is NOT a broker/dealer).