Feb 25, 2020
This week, I’m talking about the fiduciary standard in the world of financial advice. What is a fiduciary and why should you care?
Today, I’m laying the groundwork by defining fiduciary and what it means.
A fiduciary duty is the ethical and legal obligation to act solely in someone else's best interest. A fiduciary advisor must put the interests of their clients ahead of their own. This should be in writing and it’s the highest standard of care that exists between any advisor and his or her clients.
It sounds like that a fiduciary duty should just be the table stakes when dealing with a financial advisor, but unfortunately that’s not the case. Most advisors do not operate under a fiduciary duty in all circumstances with all of their clients, which means the relationship is more likely to be fraught with conflicts of interest.
When there are conflicts of interest and a disordered set of priorities because a fiduciary duty isn’t part of the deal, it can erode trust, or cause your advisor to do things that are not in your best interest - like invest your money in a high fee product that pays them a fat commission.
It’s important to try to eliminate these types of conflicts, and working an advisor who has a an obligation to put your interests first because they are a fiduciary to you, eliminates many of those ethical pitfalls.
That’s it for today. Thanks for listening. My name is Ashley Micciche and this is the One Minute Retirement Tip.
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