Focus On Fiduciary

For life’s critical questions, you seek advice from people with undivided loyalty to your best interests.

• Your doctor, lawyer and CPA are fiduciaries
  They must act in good faith and put your interests ahead of their own
• Federal and state law requires all Registered Investment Advisors be held to a fiduciary standard:
  • RIA must act in client's best interest even when conflicts with advisor’s financial interest.
  • RIA must disclose any conflict, or potential conflict, prior to and during engagement.
  • RIA must fully disclose how they how he is compensated.
  • RIA must provide client with copy of completed form ADV, Part II disclosure.
• Stock brokers, insurance agents, and banks do not have the same fiduciary obligations as RIAs
  • Most so-called "financial advisors" are considered "Broker Dealers" by the SEC.
  • NASD licensees are merely salesmen held to a far lower standard of diligence, "suitability."
  • Law requires these "Registered Reps" act in best interest of employer, not of you, the client.
• Best ways to judge if an advisor is held to a fiduciary standard:
  • Compensation: Fee-Only NAPFA registered advisors sell only one thing, their knowledge.
  • "Fee-Based" is a term created to confuse, allows commissions and kick backs.
  • Fiduciary must present client with his signed ADV part 2 prior to an engagement.
  • Certified Financial Planners (CFP) and "Financial Advisors" are not necessarily fiduciaries.