What Does It Mean To Be A Fee-Only Fiduciary?

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What Does It Mean To Be A Fee-Only Fiduciary?

We’ve written a lot on what it means to be a fee-only fiduciary. Here is a collection of some of the best blog posts to date on the subject.

What Is a Fee-Only Fiduciary?

You Deserve a Fiduciary Standard of Care

Most investors are not aware of a critical division of professionals in the world of financial services. This distinction lies between fee-only fiduciaries who are free to act in your best interests and commission-based agents and brokers who are required to act in the best interest of the companies that employ them.

Ten Questions to Ask a Financial Advisor

Someone asked me what disclosures I would require for financial advisors. I’ve written these principles in a yes-or-no format and reworded the questions. “Yes” is the best answer and “no” means you should seek more information or not consider that advisor at all. Although answering affirmatively to all 10 questions would be my first screen in selecting a financial advisor, it still does not guarantee the person has the competence necessary to offer comprehensive wealth management.

Fee-Only Financial Planner: What’s the Difference?

Fee-only financial planners are registered investment advisors with a fiduciary responsibility to act in their clients’ best interest. They do not accept any fees or compensation based on product sales.


Fiduciary: Everyone Wants the Title

Bob Veres has a great article in Financial Planning Magazine about the issues associated with being a fiduciary entitled, “Give Up the ‘Fiduciary’ Fight“. In Veres’ article he writes:

With all the arguments and lobbying around the fiduciary standard, I think the profession is in danger of forgetting the big picture. The fight over the “fiduciary” label is really just one more battle in a long war between professionals and sales agents.

Fiduciary Fight Part 1: The Fight Over The Fiduciary Label

The fight is on! Everyone wants to be known as a fiduciary, but not everyone deserves the title.

Fiduciary Fight Part 2: Additional Congressional Regulatory Oversight Can’t Be Trusted

Congress cannot protect you from the financial sharks who contribute to their campaigns, but they may protect the sharks.

Fiduciary Fight Part 3: Distinguish Between Brokers And Advisors

I love that Bob Veres thinks that labeling someone as a broker or advisor would help bring clarity. It shows his optimism.

Fiduciary Fight Part 4: Fiduciary Oath

“Take a version of this fiduciary oath to the brokers down the street and ask them to sign it. If they refuse, ask why.”

Fiduciary Fight Part 5: Lobbyists Won’t Help

“We’d be fools to underestimate their tenacity and creativity when it comes to protecting their executive bonus pools.”


Fiduciary: Not Everyone Deserves the Title

“Fee based” isn’t the same as “fee only”

If you want advice that’s free of such conflicts, you’ll need to look for a true fee-only (not fee-based) financial planner.”

To pay for investment advice or to get it “free”?

Clark Howard recently advocated using a fee-only advisor generally and the National Association of Personal Financial Advisors (NAPFA) in particular.

A fiduciary standard is good, old-fashioned common sense

“Unfortunately, some are also misleading the public by saying that a fiduciary standard would prevent the delivery of financial services to middle-American Main Street investors.”

Most Commission-Based Advisors Caught Failing Clients in Research Sting

Study in Boston area, with undercover actors posing as clients, showed commission-based advisors putting their own interests first

Failed Experiment at the SEC

Those who don’t understand or experience regulatory capture wrongly believe in a team of angels at these federal agencies tirelessly working for the common good.

Study on Investment Advisers and Broker-Dealers

These are the wolves of Wall Street pretending to be the helpful sheep of investment advisors.

FINRA Supports Regulation to Quell Competition

Beware of government regulation, especially when a portion of the industry thinks it’ll be good for business.

Investment Advisors vs. Brokers

Low risk firms should be visited less frequently by the SEC.

Advisers Worry About Potential Costs Of Third-Party Exams

“Estimates range from $5,000 to $20,000; sharp opposition to Finra getting involved.”

You Can’t Regulate Crooks

Unnecessary regulation annoys the good guys, and doesn’t stop the bad guys.

More Wall Street Than Main Street

“Average American investors start to worry that FINRA will damage their relationship with independent financial advisors.”

Why NAPFA members are different from Goldman Sachs

“Today, if you make enough money for [Goldman Sachs] (and are not currently an ax murderer) you will be promoted into a position of influence.”

It’s flat-out illegal in other countries

There is great disagreement in the financial services world if an advisor who has continuous and comprehensive management of a client’s assets should be allowed to also benefit from transactions that they recommend.

Report: Clients confused about standards and don’t care

Unfortunately few consumers understand what a fiduciary standard means to them.

Aunt Bea knows when she’s being taken

A conversation between a wirehouse advisor and a senior citizen who seeks trust

Superman Photo used here under Flickr Creative Commons. Other photo attributions listed under the original posts.

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David John Marotta is the Founder and President of Marotta Wealth Management. He played for the State Department chess team at age 11, graduated from Stanford, taught Computer and Information Science, and still loves math and strategy games. Favorite number: e (2.7182818…)