The meaning of the word 'Fiduciary'

The word you should be hearing and thinking about when it comes to financial planning is fiduciary. This is a difficult word, not often used in the media, but it's much more important than terms they do use often, like 'fee-only'.

'Fiduciary' is also a word you will never hear spoken on Wall Street - to those guys it's like Kryptonite. Until a recent court case (Financial Planning Association v. SEC, March 2007), brokers for Wall Street firms had an exemption from the consumer protections of the Investment Advisors Act of 1940, allowing them to offer advice without full disclosure or fiduciary duty. They were able to avoid mentioning pesky details like the conflict of interest in selling proprietary products with ridiculously high sales charges (loads), or disclosing for whom they were actually working - their employer, not you.

At Bay Area Planners, we have the "duty of care of a fiduciary", which includes:
  

•  Putting the clients’ best interests first when providing financial planning advice and recommending financial products

•  Acting with due care and utmost good faith,

•  Not misleading clients , and

•  Providing full and fair disclosure of all material facts, including conflicts of interest.

When you are picking a financial advisor, be sure to ask these three questions and expect a 'Yes' answer to each::

1) Is this an advisory relationship?

2) Are you held to a fiduciary, or best interest, standard in all dealings with me and my financial affairs?

3) Do you disclose all confticts of interest, both actual and potential, that exist or might exist in my relationship with you?

To discuss how the terms 'Fiduciary" and "Fee-Only" affect you as a consumer,, call (408) 725-7135 or click here.

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