Fiduciary Duty

What is this and how does it impact an Advisor/Client relationship?

This is profoundly important and the debate continues as to what should govern a relationship between a client an advisor:

From:

CANADIAN SECURITIES ADMINISTRATORS
CONSULTATION PAPER 33-403:
THE STANDARD OF CONDUCT FOR ADVISERS AND DEALERS:
EXPLORING THE APPROPRIATENESS OF INTRODUCING
A STATUTORY BEST INTEREST DUTY WHEN ADVICE IS PROVIDED TO RETAIL CLIENTS

October 25, 2012

Fiduciary Duty -- An Overview

A fiduciary duty is a duty of a person to act in another person's best interests.{5} For our purposes, a fiduciary duty applicable to an adviser or dealer means that the adviser or dealer (the fiduciary) would have to act in the best interests of her client. In general, acting in your client's best interest means that the fiduciary must ensure that:

• Client interests are paramount,

• Conflicts of interest are avoided,

• Clients are not exploited,

• Clients are provided with full disclosure, and

• Services are performed reasonably prudently.

More here: http://www.osc.gov.on.ca/en/SecuritiesLaw_csa_20121025_33-403_fiduciary-duty.htm

I know, it is easy to have your eyes "glaze over" when it comes to regulatory issues.

But anyone who is a client of a financial advisor has to ask themselves a key question: 

Is the person looking after me putting my interests first, ahead of their own interests?

and as an extension of this:

Am I being treated as an individual or as just another client in a large group of "similar" clients?

Are my goals and objectives the first priority?

Advisors do need to get paid for what they do, and perhaps those who do it better can charge a little more.

But when you make your decision to work with an Advisor, ask the difficult question (and make certain that it is the truth):

Where do I stand in your list of priorities?