What is a Fiduciary?
The media and investor education have done a good job of promoting fiduciary financial advisors. When someone calls our office, they have often searched for “fiduciary financial advisor in Bellingham” and landed on our website.
But what is a Fiduciary? Turns out, the definition is not so clear:
Definition of Fiduciary
Fiduciary means to place confidence and trust in someone else, but the term has evolved to mean different things to different groups.
The Securities and Exchange Commission Definition
Skyline Advisors, as a Registered Investment Advisor, is a fiduciary under a legislative principle laid out decades ago and further refined by the Supreme Court and the SEC. This definition of fiduciary means that we have a duty of loyalty and care to our clients. In practice, we put your interests above our own and provide informed advice personalized for you. If there is a conflict of interest, we must disclose it before or at the time we enter an agreement with a client.
The CFP® Certified Financial Planner Definition
The Certified Financial Planner Board of Standards requires that CFP® professionals also follow a fiduciary standard, but it is focused on what types of services you provide. Certain services like financial planning require fiduciary duty, but trade execution and education do not. In other words, a CFP® can technically be a “part-time” fiduciary. This definition is still strong but can leave some gaps. Skyline Advisors’ CERTIFIED FINANCIAL PLANNERS™ fall under this definition too.
The Department of Labor Definition
The Department of Labor has their own fiduciary definition that is constantly evolving. The Retirement Security Rule further defined this standard to apply to retirement accounts. This definition is more strict because it lays out a requirement to avoid a conflict of interest, not just disclose it. Skyline Advisors has this fiduciary duty too.
Be Cautious
All of these definitions require that a financial advisor put your interests above their own, but if a person is a “broker” or “registered representative” who earns commissions, the water is murkier. They must be a fiduciary when providing advice, but not when selling a product. They are a “part-time” fiduciary. Even more confusing is a Registered Investment Advisor that is also a broker!
Skyline Advisors
Skyline Advisors is a full time fiduciary. We are “fee-only” which is a phrase used to describe fiduciary financial advisors who don’t earn commissions. We always provide investment recommendations based on your stated needs, not the amount of compensation we receive.
We are independently owned and operated and have built in our fiduciary values into our services and structure. If you would like to learn more, contact us.
The content of this blog is for informational purposes only and should not be construed as investment, tax, or estate planning advice. Skyline Advisors, Inc. is an SEC Registered Investment Adviser. Advisory services are only offered to clients or prospective clients where representatives of Skyline Advisors, Inc. are properly licensed or exempt from licensure. If indices are referenced in marketing material, it is important to note that these cannot be invest in directly, any vehicle such as Passive index-based ETFs and Mutual Funds which attempt to replicate indices have internal expense ratios and other associated costs that would negatively impact returns. No advice may be rendered unless a client service agreement is in place. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital.