While the National Regulators Fumble, the CFP® Board Acts
Definition of a Fiduciary:
A fiduciary is a person who holds a legal or ethical relationship of trust with one or more other parties (person or group of persons). Typically, a fiduciary prudently takes care of money or other assets for another person.
~Wikipedia
Throughout our website and publications Skyline writes of the special Fiduciary Duty we have to our clients. We believe the investing public deserves this standard of care. Currently very large financial companies in the US have opposed this through lobbying and legal tactics. Reminiscent of Big Tobacco stating that smoking is safe if you just do not inhale, the big money interests have pushed their “suitability standard’ a much lower standard of care.
Recently, the CFP® board announced that in the fall of 2019 all Certified Financial Planners must act as Fiduciaries when providing financial advice to clients. This new rule places responsibility on CFPs® to act in the best interest of their clients, putting client interests first. The Certified Financial Planner Board of Standards is the governing body of all CFPs®. In the past, the two main governmental regulators of Investment Brokers, the Securities Exchange Commission (SEC) and the Department of Labor (DOL) have fumbled this important consumer protection succumbing hopelessly to the special interests of the big corporations lobbying and legal machines. CFP® Board of Standards has acted and now the clients of CFPs® will have the protection of the Fiduciary Standard of Care.
Following the 2008 financial crisis, the SEC determined a unified rule for Fiduciary Standards was necessary for all investor’s protection. I have attached a link below to a Wall Street Journal Article by Jason Zweig about the slow progress on the governmental side of this important consumer issue.
A Fiduciary Standard of Care is the highest standard under the law. A Fiduciary must put the client’s needs ahead of her own. Skyline is a Fiduciary to our investment advisory clients because we are a Registered Investment Advisor and are required to act as a Fiduciary under the 1940 Investment Advisers Act. Brokers are not. Currently, brokers must only offer up suitable investments under the suitability standard. An investment could be suitable and still have very high imbedded fees or send your broker on a sponsored trip to Tahiti.
Skyline supports this unified standard which holds all who render investment advice to a Fiduciary Standard, and we commend the CFP boards strong actions in this regard.
Notes, Attachments and Links:
Certified Financial Planner Board of Standards, Inc. (CFP Board) was founded in 1985 as a 501(c)(3) non-profit organization that serves the public interest by promoting the value of professional, competent and ethical financial planning services, as represented by those who have attained CFP® certification. CFP Board sets and enforces the requirements for CFP® certification, including:
Individuals who successfully complete CFP® Board’s initial and ongoing certification requirements are authorized to use the CFP® certification marks in the United States.
Link to the CFP® board release about the Fiduciary Standards:
Link to Wall Street Journal article:
http://jasonzweig.com/the-first-line-of-investing-defense-you/
Skyline Advisors, Inc. is a Registered Investment Adviser. This brochure is solely for informational purposes. Advisory services are only offered to clients or prospective clients where Skyline Advisors, Inc. and its representatives are properly licensed or exempt from licensure. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Skyline Advisors, Inc. unless a client service agreement is in place. This commentary reflects the personal opinions, viewpoints and analyses of the Skyline Advisors, Inc. employees providing such comments, and should not be regarded as a description of advisory services provided by Skyline Advisors. The views reflected in the commentary are subject to change at any time without notice.