This is my first musing and something I’ve been meaning to write about for a long time. The word fiduciary. It’s a big part of my company’s mission statement--it appears on the home page of my website, it’s on my business cards and it’s on my fancy purple and white (hat tip to K-State) old-school Bic Clic pens. The bottom line is fiduciary is a huge part of what makes me different, as an hourly, Fee-Only financial planner. So here’s what it means and why you should care.
While investment advisers (like Nichols Financial Advice, LLC) are required to put their clients’ interests first, brokers are able to make recommendations that, while “suitable” for their clients, are not necessarily in their clients’ best interests. You read that correctly. Brokers (most often commissioned salespeople) are not required to put your best interests ahead of their own. Crazy, huh?
Please note, this doesn't mean that all commissioned salespeople are putting their best interests ahead of your best interests, I just think it's important for people to know the difference between the fiduciary and suitability standards that exist today in the financial services industry.
This is very confusing and harmful to investors like you, who simply expect that any financial planner is going to provide advice that is in your best interest. Period. It’s what you expect and it’s what you should get.
Here’s the bottom line… Be wary of any financial planner who gives you financial advice and also sells you the products he/she is recommending. And just ask your financial planner if they are a fiduciary. If they give you any answer other than an emphatic, “Yes”, here’s another “F” word to share with them: “Farewell!”