You have responsibilities. Your advisor has responsibilities. Other professionals involved have responsibilities too.
Your responsibilities mainly include being open and honest about personal finances and engaging in the process by cooperating with your advisor and other professionals.
Your advisor has the main responsibility to uphold their fiduciary duty to you. A fiduciary is a person that is legally obligated to maintain an allegiance of loyalty to their clients. As a fiduciary, your advisor shall exercise his best efforts to act in good faith and in your best interest. Your advisor shall provide you with written disclosure prior to the engagement, and throughout the term of the engagement, if any conflict of interest exists, or which could or reasonably may compromise his impartiality or independence. Furthermore, your advisor, and any party in which he has a financial interest, does not receive compensation or other remuneration that is contingent on you purchasing or selling anything. Your advisor does not receive a fee or other compensation from another party based on your referral or your business.
This fiduciary duty means your advisor shall:
• Always act in good faith and with candor
• Be proactive in disclosing any conflicts of interest that may impact you
• Not accept referral fees or compensation contingent upon the purchase or sale of a financial product.
Many qualified professionals practice in their field of expertise. A qualified fiduciary will discuss their areas of expertise and delegate to or recommend other qualified professionals outside the scope of their practice.
Personal financial advisors furnish advice to individual clients on financial plans utilizing knowledge of tax and investment strategies, securities, insurance, pension plans, and real estate. Duties include assessing clients’ assets, liabilities, cash flow, insurance coverage, tax status, and financial objectives. Advisors help their clients plan for short-term and long-term goals. They make recommendations to help clients achieve their goals.
Be aware that generic terms like Financial Analyst, Financial Adviser (Advisor), Financial Consultant, Financial Planner, Investment Consultant or Wealth Manager are generic terms or job titles, and may be used by professionals who may not hold any specific designation. Many professionals call themselves by a job title, but may only be licensed or registered to recommend a narrow range of insurance and/or securities offered by the firms they represent. Financial professionals come from many different education and business backgrounds. Be sure to ask about their background. Some financial professionals have credentials. Find out what organization issued the credential, and then contact the organization to verify whether the professional you are considering did, in fact, earn the credential and whether the professional remains in good standing with the organization.
QUESTIONS: Is your relationship with your advisor based on trust and trustworthiness? Is your advisor a qualified fiduciary?
Chris Bryant is an American financial advisor.