Fees of a Fee-Only adviser are only paid by the client.
I have not understood why there has been any resistance to requiring financial planners and investment managers to be held to a fiduciary standard. A recent article in the Wall Street Journal (WSJ) may indicate why some do not want to be held to a fiduciary standard.
The Free Dictionary by FARLEX defines a Fiduciary as: “An individual in whom another has placed the utmost trust and confidence to manage and protect property or money. The relationship wherein one person has an obligation to act for another’s benefit.”
A fiduciary relationship encompasses the idea of faith and confidence and is generally established only when the confidence given by one person is actually accepted by the other person.”
Many of us believe it is putting the client first.
Jason Zweig’s September 20th article “ ‘Fee-Only’ Financial Advisers Who Don’t Charge Fees Alone” may show why there is resistance to a fiduciary standard for financial planners and investment managers. They found that 24% of the 33,949 certified financial planners (CFP) they analyzed described their compensation as “fee-only”.
The article notes that “Securities lawyers and government regulators say that an adviser who works for a brokerage firm or insurance company that charges commissions shouldn’t describe his services as ‘fee only’, even if the adviser himself doesn’t charge commissions to his clients.” Although none of the CFPs at major banks and brokerage firms, the WSJ identified 661 listed CFPs who call themselves ‘fee-only’” at some of the major banks and brokerage firms. The problem extends beyond CFPs.
Can you argue that if the compensation is not accurate, the advisor is not a fiduciary?