Is Your Financial Advisor a Fiduciary?

Julia M. Carlson, CExP |

Is Your Financial Advisor a Fiduciary?

With a recent endorsement, President Obama committed to the fiduciary standards for financial advisors. This could have significant impact on the investment industry. Personally, I am excited for this because under the current model, advisors are not required to act in the client’s best interest. Yes, you read this correctly. As the law currently stands, broker-dealers, insurance salespersons and advisors operation under the “suitability standard” are only required to ensure a product is suitable for a client at the time the investment is made.

What is a fiduciary then? A fiduciary must be committed to putting their client’s interests before their own. This means that as a fiduciary, I am legally obligated to disclose all material conflicts of interest and operate with full transparency with my clients. Also, I have a “duty of care” and must continually monitor not only my client’s investment portfolio, but also their changing financial situation. One thing I know for certain, changes will always occur in life. Unexpected events, loss of a loved one, birth of a child, marriage, divorce, retirement, changes in the economy, and even how someone is feeling about risk in the market are all things that must be monitored in a relationship with a fiduciary financial advisor.

Under the suitably standard the financial planning process begins and ends often in a single meeting. For fiduciaries, the first meeting only begins the journey of a relationship that the advisor is legally obligated to develop and uphold. I wholeheartedly support this way of doing business because I want to have a vested interest in the success of my clients. 

Information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation.

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.