If you work with me you will have a CFP ® who is a financial fiduciary on your team. That means I have a legal obligation to put your interests before my own. Stock brokers and insurance agents work for their employers. I work for you.
Let me illustrate how important this is. Assume your daughter needs to get her tonsils taken out and you have to choose between two doctors. One works for you (a “health fiduciary”) and the other is employed by a pharmaceutical company. Which one do you want operating on your child? Of course the answer is clear. You want the one who works for you because you want the best possible outcome for your daughter.
In the real world you don’t have to make this choice. If a doctor treats patients but does what’s best for the drug manufacturers, the doctor goes to jail. I wish I could say the same thing about financial service providers but I can’t. I’m sad to report that brokerage firms and insurance companies get away with telling people they are “operating” with the clients’ best interests at heart when in fact they are not. They get away with this because they do not have a fiduciary responsibility towards clients. So this is very misleading and it has dire consequences but it’s not illegal.
What is a fiduciary? A fiduciary is a person who has a legal obligation to put your interests above their own. If they fail to live up to this standard, they can be sued or prosecuted or both.
Why Is A Financial Fiduciary So Important?
There are times when we have to rely on other people. We have no choice because they have expertise that we need but do not have. When we take that leap of faith, it’s nice to know the people we are working with are obligated to put us at the front of the line. How would you feel working with someone who legally obligated to act in your best interests?