What Is a Fiduciary Financial Planner, and Why Does It Matter?
Chris Broome – Chartered Financial Planner
Your relationship with an independent financial adviser should always be based on mutual respect and trust.
It is for these reasons that we here at Longhurst are practitioners of fiduciary financial advice.
However, you may not have heard of the term ‘fiduciary’ before.
My article today is to explore the term fiduciary, and why it’s important when picking a financial expert to partner with.
Fiduciary definition
An individual or organisation that states they are a fiduciary should always be acting in the best interest of a particular individual or client.
A fiduciary must avoid conflicts of interest.
They must put the best interests of its clients first, always.
A Financial Planning Fiduciary
By partnering with a financial planner or adviser who practices fiduciary advice, you have partnered with a firm who have an obligation and a responsibility to each client they work with to make sure their best interests are put first.
They will ensure your life savings are invested with the same level of importance that they invest their own family’s life savings, treating your capital as a hard-earned asset requiring careful attention.
They will also ensure you are shielded, as best as possible, from external noise and others attempting to mislead you financially.
How to vet a potential financial planner to work with
If you’ve identified a new financial planner you’d potentially like to work with, here are some items to check before you decide:
- How do they earn their fee? Is it fully transparent? How confident are you they’re telling you the truth about this?
- What qualifications and accreditations do they hold? As a minimum they should hold either Chartered or Certified Financial Planner status. Ideally they’d also have an ISO or British Standards kitemark.
- What services do you offer? Who is their typical client? Are they working with lots and lots of households (potentially time pressured), or a smaller closer-knit client base (meaning more time is being spent with them)?
- How often do you typically communicate with clients? Is it just once a year? Or more frequently, and in different forms?
- Can you provide a written guarantee of your fiduciary duty? Can they back it up with examples? Will they let you speak to other clients of theirs?
Summary
When you’re working with a financial professional, it’s key to find out if they follow a fiduciary standard. This is because they operate under a different mindset than somebody bound only by the regulators suitability rule.
Ultimately though, when it comes to choosing someone to manage your hard earned capital, you should find someone you can trust, and trust explicitly.
As always, the team at Longhurst is here if you have any questions or would like to discuss this article.
Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.
