Accountants, Doctors, & Lawyers are fiduciaries. Your car salesman isn’t.
What Is A Fiduciary Financial Advisor?
The Definition of Fiduciary
fi-du-ci-ar-y: A financial advisor held to a Fiduciary Standard occupies a position of special trust and confidence when working with a client. As a Fiduciary, the financial advisor is required to act with undivided loyalty to the client. This includes disclosure of how the financial advisor is to be compensated and any corresponding conflicts of interest.
- Suitability Standard of Care. This is the “basic” standard of care in the industry. The Suitability Standard says that your financial advisor or broker must perform reasonable due diligence on investment and insurance products, must reasonably understand them, and have a reasonable basis to believe that an insurance or investment product is suitable for you as an investment strategy.
- Fiduciary Standard of Care. The fiduciary standard of care requires a high level of responsibility to you and your financial planning. By embracing a fiduciary standard of care, your financial advisor must put your best interests ahead of their own at all times regardless of compensation, perks, or other benefits. This is similar to the responsibility your accountant, attorney, or doctor has.
Why Isn’t Every Financial Advisor A Fiduciary?
With the Department of Labor Fiduciary Rule (04/16), you’re seeing more and more “fake” fiduciaries—those who claim they’re a fiduciary, but only in the context of the actual law. While the rule is generally good for consumers, it’s highly watered down and only applies to retirement accounts.
If being a fiduciary is appropriate for your 401k or IRA, why isn’t it appropriate for your joint or trust account? While the law is a good first step, it doesn’t protect all investing consumers from the perils of shady brokers.
You’ve worked hard for every dime you have. Shouldn’t you require a fiduciary standard of care in writing from your financial advisor?
We embrace our fiduciary responsibilities to all of our clients in writing, because words are only words until they are backed by a promise with a signature behind it!