Financial Planners work with clients to put together a well thought out financial plan; and to invest their life savings prudently with a view to working toward their goals and hopefully a prosperous retirement. This should result in a ‘win-win’ relationship all round.
The key phrase there is the client’s life savings. It is a term we are all familiar with, but when you think about it, that is usually a sum of money that our clients have accumulated throughout their working life, and either they have had a bad advice experience already and are looking for an alternative, or they simply want to get their financial house in order. So, why would advisers and financial planners not put their client’s interests first ?
I read this article at ft.com and this issue will clearly take some time to get resolved in the US. Frankly it baffles me why we are still in this position in 2015. As far as the UK goes, one would hope that the Retail Distribution Review (RDR) ensured that the ‘bad apples’ have largely been rooted out, but articles like this and this just continue to crop up, even after RDR. UK bodies like the Institute of Financial Planning do a really good job of promoting proper financial planning and professional advice, and I am sure that all of the Certified Financial Planners that I have met are already acting in a ‘quasi-fiduciary’ capacity. But surely we need to look toward adopting a proper fiduciary standard for financial advice in the UK, whereby every adviser has a legal obligation to put a client’s best interests first in all circumstances.
Fiduciary duties may be seen more of an aspect of common law rather than something established by rules and regulations. However, I for one would be happy if the Financial Conduct Authority in the UK adopted a fiduciary standard that advisers would be held accountable to, which would hopefully prevent the dreadful stories from this weeks news.
The definition of a fiduciary relationship is detailed below:
“In a fiduciary relationship, one person, in a position of vulnerability, justifiably vests confidence, reliance, and trust in another whose aid, advice or protection is sought in some matter. In such a relation good conscience requires the fiduciary to act at all times for the sole benefit and interest of the one who trusts.” Surely this sums up how a client/financial adviser should be. At Callisto we ensure that we sit on the same side of the table as our clients. We invest in a way that is transparent, very diversified, low cost and backed by decades of the most highly-respected academic study.
As advisers, we want to do what is best for our clients and their families and this approach fulfils that.