Fiduciary

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Certified Financial Planners must abide by the fiduciary standard.  Not all financial advisors do.  What is it?  What does it mean?

Terminology: “Fiduciary.”

One who acts in utmost good faith, in a manner he or she reasonably believes to be in the best interest of the client. A CFP® professional must at all times act as a fiduciary when providing Financial Advice to a Client, and therefore, act in the best interest of the Client. In this regard a CFP® professional must:

Duty of Loyalty:

  1. Place the interests of the Client above the interests of the CFP® professional and the CFP® Professional’s Firm;

  2. Seek to avoid Conflicts of Interest, or fully disclose Material Conflicts of Interest to the Client, obtain the Client’s informed consent, and properly manage the conflict;

  3. Act without regard to the financial or other interests of the CFP® professional, the CFP® Professional’s Firm, or any individual or entity other than the Client, which means that a CFP® professional acting under a Conflict of Interest continues to have a duty to act in the best interest of the Client and place the Client’s interest above the CFP® professional’s.

Duty of Care:

A CFP® professional must act with the care, skill, prudence, and diligence that a prudent professional would exercise in light of the Client’s goals, risk tolerance, objectives, and financial and personal circumstances.

Duty to Follow Client Instructions:

A CFP® professional must comply with all objectives, policies, restrictions, and other terms of the Engagement and all reasonable and lawful directions of the Client