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Check Out Focus on Fiduciary
By JLP | August 12, 2006
I was just browsing through the July 2006 issue (why I got it on August 12, I do not know) of NAPFA Advisor and noticed that the NAPFA has kicked off a big PR campaign called Focus on Fiduciary. Their goal is to educate the general public about what a fiduciary is and is not. Here’s the definition of a fiduciary according to their website (I hope they don’t mind me cutting and pasting this information because there is no actual link to the definition):
THE DEFINITION OF FIDUCIARY
The Board of Directors, Representatives, and Financial Advisors comprising NAPFA have developed the following definition of Fiduciary:
fi•du•ci•ar•y – A financial advisor held to a Fiduciary Standard occupies a position of special trust and confidence when working with a client. As a Fiduciary, the financial advisor is required to act with undivided loyalty to the client. This includes disclosure of how the financial advisor is to be compensated and any corresponding conflicts of interest.
NAPFA firmly believes this is the strongest definition of Fiduciary available because of the basic requirements of Trust, Loyalty, and Disclosure.
Trust – Someone who does not completely trust their financial advisor can never be fully confident that they are receiving the best possible advice from the best possible advisor. Without trust, can confidence really be achieved?
Loyalty – An advisor who is loyal to only their clients will not be swayed by outside forces to recommend investments with higher commissions or payouts. Without loyalty, can people ever be sure their own interests are being looked after?
Disclosure – People must know, and understand, how their financial advisor is being compensated for the advice they are providing and whether or not any conflicts exist that may cause a problem with that advisor’s ability to provide truly independent advice. Without disclosure, can prudent advice be provided?
I think this is a good thing. Go to NAPFA’s website and read all about it.
DISCLAIMER: I am not a member of the NAPFA.
Topics: Financial Planning | 2 Comments »
August 14th, 2006 at 12:18 pm
And the most important concept is that of equity. And a fiduciary duty should be the highest standard of care imposed at either equity or law.
August 18th, 2006 at 5:31 am
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