More and more the idea of Fiduciary is making waves in the financial service industry. So much that an interesting article came out in the New York Times: Pick a Planner Who Can Spell ‘Fiduciary’. Interestingly enough, this article came out before the Madoff debacle, and contains the description of what to look for in an advisor that is eerily familiar.

As applied to financial advisors:

A Fiduciary is a Financial Advisor who is held to a Fiduciary Standard, and 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.*

A Fiduciary puts their client’s interest above their own. This is similar to a doctor’s Hippocratic oath whereby the doctor has to put your interest first when giving advice and subscribing medicine. You would think that this would be the case in every profession. Not so! Not all financial advisors are fiduciaries.

Federal and state law requires that Registered Investment Advisors are held to a Fiduciary Standard. The law requires that an advisor act solely in the best interest of the client, even if that interest is in conflict with the advisor’s financial interest. Unfortunately, only a small portion of “financial advisors” are federally or state registered investment advisors. Most financial advisors are considered “Broker-Dealers” by the United States Securities and Exchanges Commission (SEC). They are held to a lower standard of diligence on behalf of their clients. In fact, they are required by the federal law to act in the best interest of their employer, not the best interest of their clients.

IAM Financial, LLC is a Registered Investment Advisor, registered with the State of  Michigan , and Fiduciary to its clients. Prior to all engagements, we sign the National Association of Personal Financial Advisor (NAPFA) Fiduciary Oath indicating that we will put our client’s interest before our own. Does your advisor promise to put your interest first? If so, is it in writing?


Rich Feight, CFP
Rich Feight, CFP

Hi, I'm Rich Feight I'm a fee-only Certified Financial Planner, successful business owner, and self-made millionaire that knows how to beat the system and become wealthy. I have a lot of clients that have done it too. I'm also pretty good at finding that ever-elusive work/life balance so many of us strive for. Lucky for you I have an abundant mindset and give all my knowledge away on my blog. So if you want to know what it takes to become a millionaire, follow me.

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