The Beneficiary of a Fiduciary
More and more frequently, I am being asked whether I hold myself to a fiduciary standard as the awareness of this term spreads. However, I find that even the people who are aware enough to ask the question don’t really understand what it means, even while they sense it is important. Let me attempt to clear up the confusion.
What is a Fiduciary?
To act as a fiduciary simply means that you are putting the interests of those you serve ahead of your own personal interests. Examples of people who are expected to act as a fiduciary include lawyers as they serve their clients, trustees as they make decisions for the trust beneficiaries, and doctors as they take care of their patients. However, it comes as a surprise to many people that not all financial advisors are held to a fiduciary standard. The standard for many financial advisors has been the suitability standard which means that their recommendations had to be suitable for the client, but this falls short of saying that the recommendations had to be in their client’s best interest.
Is Your Financial Advisor a Fiduciary?
It may not be clear whether the financial advisor that you are working with strives to act as a fiduciary would with only your best interests in mind. One way to find out is to ask them. Another way to be certain is to work with an advisor who is a CFP, or Certified Financial Planner. I consider the CFP to be the gold standard of accreditations in our industry. Among the many benefits is that all CFPs are required to hold themselves to a fiduciary standard for their clients, and are held to that standard through compliance and oversight. Again, this means that an advisor who is a CFP will have to provide recommendations to you that they believe are in your best interest regardless of how it impacts them or their bottom line.
Do I Hold Myself to a Fiduciary Standard?
You might have guessed by now that I strive to act as a fiduciary would with only your best interests in mind, and that I believe it is an important role. I got into this business eight years ago to help people and make a difference, so it is a given to me that I will put my clients first. And when I became a CFP in 2017 and then an Accredited Investment Fiduciary (AIF) in 2019, holding myself to a fiduciary standard was solidified even further. I believe it is easier for me to hold myself to a fiduciary standard since I am an independent advisor, which means that I don’t represent any particular investment or insurance products, freeing me to provide professional recommendations for my clients.
About the Author
Neil Manning, CFP, AIF, CDFA, FSA
I am a reformed actuary turned financial advisor, helping my clients with everything from investments to retirement projections to LTC insurance since 2014. Unlike most normal people, I love numbers and finance – I’m currently reading a book about game theory which my wife and two teenage daughters think is unbelievably boring (they are wrong). For more details about my background, check out my website below.