Accountants, Doctors, & Lawyers are fiduciaries. Your car salesman isn’t.
What Is A Fiduciary Financial Advisor?
The Definition of Fiduciary
The Board of Directors, representatives, and financial advisors comprising NAPFA (The National Association of Personal Financial Advisors) have adopted the following 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.
About 220 firms worldwide have achieved the prized CEFEX Fiduciary Certification. There is no higher level of Fiduciary Excellence than the CEFEX Certification, and it’s nice to be the a CEFEX certified fee—only financial advisor in Las Vegas:
There’s a lot of misunderstanding among consumers about who exactly is-and is not-a fiduciary plan advisor. To separate the two, you must understand the two standards of care and client responsibility in the financial services industry:
- 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?
Very few financial advisors will accept the liability that comes with a fiduciary standard of care. The fiduciary standard exposes an advisor to a much higher level of responsibility and puts them at greater risks for lawsuits.
Your employees have worked hard for every dime in their 401k or retirement plan. Shouldn’t you require the highest level of care and responsibility—a fiduciary standard of care—from your 401k plan 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!