I was thinking about the “right” lead-in to the video below and I found it in a book written by a well-known colleague who is a fellow Certified Financial Planner, Roy Diliberto.
Here’s a few verbatim sentences from page 7 in his book, “Basic Truths for Financial Life Planners” about why clients should want their advisor to act as a “fiduciary” vs. the much lower but more prevalent “suitability” standard of care. Here it goes:
From page 7: “How does this sound for an elevator speech?
I want to help you with your financial goals, but I don’t want to be legally required to place your interests above mine because that would be too cumbersome for me to implement and my compensation could be diminished. Conflicts of interest may arise from time to time, but I will not disclose them to you. In addition, I don’t want the additional liability that comes with a fiduciary standard. But I will do my best to help you.”
Now for this month’s 60 second video (below):
all the best… Mark
PS – Having said all of that, being a fiduciary does not mean an advisor is necessarily more skilled, has more experience or makes the best recommendations (in hindsight). Nor does NOT being a fiduciary make an advisor less skilled or make bad recommendations. However, all things being equal, most consumers, once educated about the differences, seem to gravitate towards an advisor who is always required to place the client’s interests above their own, make recommendations that they themselves would do given the same circumstances, goals, tolerance for risk etc. and has disclosed any conflicts.