I was asked recently if I was a “fiduciary”. I had to ask what they meant with their question. “Fiduciary” always meant to me the same thing as “trustee” as with a trust or acting in a manner having been named in a trust as a “trustee”. They continued with explaining what they wanted to know by the question they found flying all over the internet. It is a good and important question to ask a prospective financial advisor.

There are a plethora of descriptive terms for CFP certificants. A fiduciary is a person who places an individual’s best interest ahead of their own. This includes, but is not limited to, full disclosure, manner and method of compensation plus any conflicts of interest. Now a problem may exist with individuals in the business who choose not to act in a fiduciary manner. Do you think they would admit to you if they had no intention of placing your best interest first?

The Certified Financial Planner Board of Standards issues Rules of Conduct for their certificants. The rules state, in part, that CFPs should define what services they will provide, and for how much, and only offer advice in areas in which they are competent.  Know there are some advisors in business who are only able to sell proprietary products. As long as the facts are disclosed the individual may still be acting in a fiduciary capacity even if there are other products or investments that are better for you.

I am glad I asked them to explain as their question was being asked where the term was used as an adjective and not a noun. I have always acted, and will always act, in a fiduciary manner. Usually a financial advisor is prohibited from acting professionally as a legal representative for an estate or a trust as a “trustee/fiduciary” (noun) as it might become a conflict of interest. But, any person who chooses to be in the business as a financial advisor should always act in a fiduciary (adjective) manner. Unfortunately, there are people in this business who choose to conduct themselves otherwise.

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