Our Fiduciary Pledge

Our firm is committed to the general principles of honesty, integrity and professionalism, and of putting the interests of our clients first. We will not take inappropriate advantage of our position of trust. We will hold the identity of the security holdings and financial circumstances of our clients to be confidential, maintain our independence in the investment recommendations and decisions on behalf of our clients, and will handle all personal securities transactions so as to avoid conflicts of interest.

Why "Fiduciary" Matters to You

Raging in the financial services industry is a fierce debate over which financial professionals should be held to a fiduciary standard. The lack of application of this standard is impacting consumers in ways many are not aware. The fiduciary standard is a critical element of consumer protection and could be a defining moment in the relatively young industry of financial planning. When the fledgling medical profession voluntarily agreed to uphold the Hippocratic Oath almost two hundred years ago, a standard was set for ethics in medicine. A single fiduciary standard among financial professionals will strengthen consumer protection, but this may be slow coming. In the meantime, consumers would be wise to learn how to protect their interests.

The most basic definition of the fiduciary standard is "putting the client's interest ahead of your own". The Committee for the Fiduciary Standard outlines five principles of a fiduciary standard. To paraphrase, they are:

  • 1. Put the client's best interests first.
  • 2. Never mislead clients.
  • 3. Act with prudence.
  • 4. Avoid conflicts of interest.
  • 5. Disclose and manage unavoidable conflicts in the client's favor.
Every decision and every piece of advice as a fiduciary must have the client's interests first, as if you were advising yourself or your family. It may come as a shock to some consumers to realize that not all providers of financial advice and services are required to put your interests first. In fact, different subsets of the industry have very different standards.

Unlike the medical profession that requires all fields of medicine to "do no harm," the standards for financial services differ depending on practice areas. Financial service professionals are typically licensed in one or a combination of the following three registrations with each one carrying a separate standard of responsibility. An investment advisor representative is legally allowed to provide financial advice and manage money and must uphold the fiduciary standard. A registered representative is legally able to sell many types of investments to consumers and must follow the suitability standard. An insurance agent, who is also a registered representative, is legally able to sell insurance-based investments and must follow the suitability standard as well as any state insurance rules. These standards may seem minor on the surface but have very different ramifications to the consumer.

"What would be best for consumers is blanket coverage for whenever they receive financial or investment advice without exceptions, exemptions, or carve outs," says Knut Rostad, Chairman of The Committee for the Fiduciary Standard. Yet current patchwork regulations do not require one standard across all types of financial services rendered. The same financial professional may legally use a different standard with the same client depending on the type of investment or service being provided.

Some financial service professionals, concerned about this double standard, voluntarily join associations that require upholding the fiduciary standard, regardless of what type of service is provided to clients. The Financial Planning Association requires members to use the fiduciary standard with clients. Certain types of financial certifications require holders to adhere to a fiduciary standard as well.

Despite the nuances to who is and is not legally required to use a fiduciary standard, "There is an extraordinarily simple way for consumers to ensure their advisor commits to meeting the fiduciary standard; get it in writing," says Rostad. "Those advisors who support the fiduciary standard will have no problem with the request."

Many investors work with multiple types of financial professionals. Between their insurance agent, estate planning attorney, accountant, investment advisor and financial planner, a consumer could be fielding advice from any number of professionals who all hold to differing standards. Whether you are evaluating a potential financial professional or reconsidering your current advisors, ask your financial professionals what standard they meet and have them put it in writing. You don't have to wait for reform to make sure that your interests come first.