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Just Another Day of Being a Fiduciary

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This is the first full week that the Department of Labor’s Fiduciary Rule has been in effect. You might remember hearing about this in our blog last year when the rule was announced, or from watching comedian John Oliver’s segment that helped bring the fiduciary standard into the public eye in an entertaining (and, be warned, very off-color) way. This rule broadens the scope of an advisor’s fiduciary duty—bringing the rest of the financial advisory industry closer to the way Halpern Financial has conducted business for nearly two decades.  

What is a fiduciary?

The simple answer (and the one we abide by at Halpern Financial) is that a fiduciary is a professional who acts in the best financial interest in the client. Period.

 One of the most common conflicts of interest in the financial advice industry is the way clients are charged. There are a number of ways to structure payment: a fee per project, a percentage of assets under management, a variety of investment product commissions, hourly fees, retainer fees, or a combination. The problem arises when these fees are not transparent, and it becomes practically impossible for clients to figure out what they are paying for. In some cases we have seen investors completely unaware what they were paying each year because the fees were hidden. You wouldn’t hire any other professional without understanding what you get in exchange for the cost, so why should financial advice be different?

 This is why we have been independent and fee-only well before it was in vogue. We do not receive any compensation other than our clients’ fee, and we have no relationship with any bank, broker or insurer. This independence provides peace of mind for our clients because our sole loyalty is to them, and we recommend only the investments and planning solutions that are most appropriate for them. This is what pretty much anyone would want of their financial advisor! Our fee-only structure puts advisor and client on the same side of the table. Not only is it the right thing to do, but the manner we are compensated puts our incentive on our clients wealth growing!

 However, being a fiduciary is not just about how an advisor is paid. This is simply one example of how an advisor can structure a business to work in the clients’ best interest. Being a fiduciary means putting clients first in all aspects, from conducting custom investment research to helping heirs through the months-long process of settling an estate to providing personal finance education like you are reading right now. A fiduciary standard is the foundation of how we serve our clients.

Either You Are a Fiduciary, or You’re Not

But what is the fiduciary standard?  At Halpern Financial, following our fiduciary oath means we shall:

  • Always act in our clients' best interest with good faith and candor.
  • Be proactive in disclosing any conflicts of interest that may impact a client.
  • Be completely transparent about our fee structure.
  • Not receive compensation contingent upon the purchase or sale of a financial product.

 The DOL rule, as written, is still pretty confusing and allows for different “classes” of fiduciaries. The rule allows advisors to act in a fiduciary capacity for certain accounts and not others. Commissioned products and other conflicts of interest are still allowed, though more disclosure is required.

 So while the fiduciary rule helps to shine a light on this topic, it’s still “buyer beware.”

 Even if you’re already a Halpern Financial client, it’s good to be an informed consumer and understand this issue. We hope you have enjoyed this blog and please feel free to reach out with any questions!

IMPORTANT DISCLOSURE INFORMATION

Please remember that past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Halpern Financial, Inc.), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions.  Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Halpern Financial, Inc..  To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Halpern Financial, Inc. is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the Halpern Financial, Inc.’s current written disclosure statement discussing our advisory services and fees is available for review upon request. Please Note: Halpern Financial, Inc.does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Halpern Financial, Inc.’sweb site or incorporated herein, and takes no responsibility therefore.  All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.

 


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