Beware Financial Advisors Who Are Not Conflict of Interest Free Fiduciary Fee-Only Advisors

On June 9. 2018, the new "fiduciary" rule will take effect requiring financial advisors to "act in the best interest" of the client with respect to retirement account advice.  Unfortunately, in the United States financial advisors are allowed to say they are fiduciary if they attempt to "act in the best interests" of the client despite being financial salespeople  and/or having conflict of interest relationships with financial service companies from which they receive software, services, and incentives or compensation to use them.  A real fiduciary financial advisor is a fee-only financial advisor who works only for the client,. sells no financial products at any time in any capacity, and has no conflicts of interest.

You are going to see media recommendations that you use Broker Check, which is only going to tell you you are finding a licensed salesperson.  They may be able, under current US law, to call themselves fiduciary despite conflicts of interest, but a true fiduciary has NO conflicts of interest.  You will want to use the SEC Advisors page, which will tell you if the individual is just an investment advisor or an Investment Advisor and Broker (salesperson).  You only want an Investment Advisor who is not a Broker. 

When you first see an Investment Advisor, you will first want to see their Form ADV Part II which explains how they do business and how they are compensated.  You want a fee-only advisor who never sale financial products, because the US Securities law allows Investment Advisors to call themselves fee-only when they allow the client to decide if they want products sold to them and not just advice.  Beware.  Watch out for fee-only financial advisors who have a relationship with any person, subsidiary, company, or firm which provides financial products, including insurance, whether commissioned or not for the product placement.  A relationship is a conflict of interest.

The United States is still a predatory frontier where the regulatory authorities only debate how wolves may dress themselves as sheep dogs and profitably feast.  In a civilized society like the United Kingdom, financial advisors must be fee-only with no conflicts of interest period as I have written before and as I have submitted testimony to the SEC previously.  As I have written, the educational and designation standards in the United States are inadequate and purposefully deceptive with no existing financial designation requiring enough education which would equal a true Masters Degree in Finance (the Financial Planning degrees are totally inadequate and designed to bring university revenue not well educated professional fiduciary financial advisors). Even NAPFA is intrinsically linked to the CFP, which is a designation predominately held by, and membership dependent on, salespeople, and just another designation requiring an professionally inadequate education. (Attorneys, CPAs, and medical doctors all require rigorous professional education as well as licensing.)  I have publicly written, as you can see in the links above, that fiduciary fee-only advisors need to be regulated by am independent regulatory body which is salesperson free to avoid the continued deception of who is truly fiduciary.  Meanwhile the SEC is again asking for comment on a fiduciary standard.  They will just ask and, if under enough pressure, design a new sheep dog uniform for wolves who have all that gold in their lairs.


 Look to the ADV Form Part II and ask pointed questions.

Print Page