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The Role of a Fiduciary – Putting Your Interests First

Starting my career with a large very well-known investment firm some 38 years ago taught me valuable lessons we use to counsel and advise clients. During that 18 year period of disappointing (biased) research and proprietary investment products that were actually manufactured by that company, I continuously asked the question: “What about my clients?” You see, inherently I felt I worked for my clients, not some financial services firm. It was by my nature and core that I cared about clients first and always sought to put their interests above that of my own or the company that wrote me my paycheck.

As many of you have undoubtedly heard, regulatory changes are coming to the finance industry pertaining to “fiduciary standards” and the obligations we have as financial professionals with respect to retirement accounts.

Let me be clear: we embrace these changes as we serve as a fiduciary for your money in advisory relationships, just as I believe we always have.

It’s important to understand that the changes are more about “legalese” than they are actual meaningful changes (at least for our clients).

So what does it mean to be a fiduciary? In short, a fiduciary is:

  1. An investment professional
  2. Who provides advice or influence
  3. And receives some form of compensation for their advice

Those three create a responsibility, a fiduciary responsibility, to always put the interests of a client first. The law simply memorializes what seems obvious to us, putting client’s interests before any company or an advisor. Many on Wall Street companies and advisors have resisted these regulations and change, not necessarily because they don’t follow them, but because agreeing to them represents a legal liability. The new regulations will require financial professionals who provide retirement investment advice to lawfully adhere to this standard.

At Prosperion we’ve always seen ourselves as fiduciaries for our clients. We always put our clients’ best interest in front of any benefit we may have. For example, our philosophy of encouraging clients to pay down debt. We want you to be free of the burden of debt, thereby giving you more flexibility and choice in your lives. But money used to pay off a mortgage is not money under our management and thus does not improve our revenues. We advise clients accordingly – it’s what is best for our clients, not us.

We always aim to build portfolios with minimal fees and expenses, and advocate transparency in the way we do business. Our goal is to always be on the same side of the table as our clients. Many financial product manufacturers include fees hidden in their products to cover the “marketing costs” of ensuring their products stay on the recommended lists at broker/dealers. Who pays for those fees? Ultimately the investors who use those products. We resist this model – and believe the industry will be forced to do so as well. This doesn’t mean we’re perfect, or that we will make the right call every time. But we will always do our very best to serve you.

In the past, not every advisor or broker has this perspective. Likewise, financial services companies are not always upfront with their clients. But the fiduciary responsibility requirement will help to protect those who need it. Though this represents more regulation in an already heavily regulated space, we believe it will cause the investing public to be more educated and informed. If that is the result of these regulations it will be a good outcome.

So what is an investor to do? Develop an enduring relationship with your advisor. Someone who is with you through the good and the bad. Who naturally looks out for you, your family, and your future. They will make sure your interests always come first.

Prosperion was formed 20 years ago to care for our clients, to provide unbiased, independent investment advice, putting their interests ahead of our own.

If you would like to have a conversation about the specifics regarding the new requirements, or if you have questions about how we manage your portfolio, please give us a call. If you know someone who needs help from a trusted advisor and wants an enduring relationship, please forward this article to them.

Steve Booren

Steve Booren

Steve started his investment career in 1978 with the NYSE investment firm EF Hutton, working in the environment of a large investment company. Desiring to provide clients with unbiased investment advice, he founded Prosperion Financial Advisors. Learn more about Steve here.

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The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Securities and advisory services offered through LPL Financial, a registered investment advisor, Member FINRA/SIPC.