21 Questions (Series) – 1. Are you always a fiduciary, and will you state that in writing?

21 Questions to Ask Your Financial Advisor


1. Are you always a fiduciary, and will you state that in writing?

Jason wants a “Yes” here.

Yes, at MARGIN we are full time fiduciaries. This defintion is not universal. It means different things to different people. This is what it means to me: Not Dual-Registered!

Some CFP™ professionals, don’t technically have to be fiduciaries. Read that again please.

It seems almost everyone calls themselves a fiduciary these days. It’s plastered on many advisor websites; pumped-up to potential clients, and commonly misused and abused as marketing. Yes, it’s painful to type this: Some advisors are not bound to do what’s best for you, but only what is “suitable.” Does that upset you as much as it does me?

Why does Jason want it in writing? Talk is cheap. Anyone can say what they want behind a closed door, or coffee shop pitch. Even so, because of the nuance within the definition, who is technically a fiduciary can vary at times, and be confusing. Said another way, an advisor can be a “fiduciary,” then, change hats into a commissioned broker held to a “suitability” standard that sells you a huge commissionable product.

This can happen all in the same meeting. No wonder you’re confused.

Here’s what it means to XY Planning Network:

“I believe in placing your best interests first. Therefore, I am proud to commit to the following five fiduciary principles: (1) I will always put your best interests first. (2) I will act with prudence; that is, with the skill, care, diligence, and good judgment of a professional. (3) I will not mislead you, and I will provide conspicuous, full and fair disclosure of all important facts. (4) I will avoid conflicts of interest. (5) I will fully disclose and fairly manage, in your favor, any unavoidable conflicts.”

Here’s what it means to National Association of Personal Financial Advisors who are “Fee-Only” (which I currently belong to)


Here’s the big one:

1. NAPFA’s definition of a Fee-Only financial planner

“NAPFA defines a Fee-Only financial advisor as one who is compensated solely by the client with neither the advisor nor any related party receiving compensation that is contingent on the purchase or sale of a financial product. Neither Members nor Affiliates may receive commissions, rebates, awards, finder’s fees, bonuses or other forms of compensation from others as a result of a client’s implementation of the individual’s planning recommendations. “Fee-offset” arrangements, 12b-1 fees, insurance rebates or renewals and wrap fee arrangements that are transaction based are examples of compensation arrangements that do not meet the NAPFA definition of Fee-Only practice. If you have questions about specific compensation arrangements, please contact the NAPFA Membership Manager.”


Who is truly a fiduciary?

What’s a short-cut? Just ask one question: Are you FINRA Series 7 or 6 licensed? If so, they can receive a commission to sell product, and they might be Dual-Registered.

Just say no to “dual registered.” A lot of these firms do financial planning for “free.” Or, it’s hard to tell how or what you pay them. If someone offers you “free” financial planning, it’s probably going to cost you a lot more money once you find out how.

Someone who is dual-registered can act as both a broker to earn big commission dollars to sell you a commissionable product, and then turn around and work as a “fiduciary” to manage your assets for a fee, and provide advice. I know. It’s highly confusing, misleading, and not easy to understand. When a “dual registered” advisors says they are a “fiduciary.” You shouldn’t have to wonder if that means right now, or always. This leads to a conflict of interest that’s not well understood by investors. Friends don’t let friends work with folks who are dual-registered. Just avoid them.

If not this is what you get…

Is your firm paying a lobbyist or it’s trade group to act against your best interest?

You might remember back in January 2017, where a law called the “fiduciary rule” was almost passed. So close, so far away. Micah Hauptman, from the Financial Services Counsel at the Consumer Federation of America (CFA) , provided context on all the firms that actively paid to defeat the rule through their lawyers or trade groups, so they could sell things that made them lots of money, and keep this defintion difficult for consumers to understand. The CFA is non-profit organization to protect consumers.

And…Because they just sell products, they couldn’t be held to a fiduciary standard.

 The firms on the list…

Some people want to work with a bigger firm because it makes them feel safe. Read the following, and ask yourself if you trust these firms? Let’s be honest, they don’t want to be fiduciaries because they make more money selling you products you probably don’t need. Many times, these same financial people who sell products are not even working in the buisness anymore, and have left you with the baby from the economic one-night stand.

Here’s what some of the firms said during the hearings:

(1) Ameriprise 


(2) Chase


(3) Edward Jones


(4) Janney


(5) Morgan Stanley


(6) Northwestern Mutual


(7) Prudential


(8) Raymond James


(9) Stifel


(10) UBS

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