The word fiduciary continues to be a hot topic of conversation within the financial planning and wealth management industry.  As you research what to look for when hiring a financial advisor, you may see the words “suitability” and “fiduciary”. While both have to do with advising you on investment strategies, they’re not the same thing, and they’re not always mutually exclusive. For example, there are some financial professionals who have “multiple industry affiliations that let them act as a fiduciary in some cases and not in others.”[1] They may act as a fiduciary through the financial planning process, but work under the suitability standard when recommending investments.  

Adding to the confusion regarding the term fiduciary, in April of 2016, the Department of Labor proposed new regulations expanding the “investment advice rule” regulating the quality of financial advice for retirement plans. It became commonly known as the fiduciary standard. Once regulation was passed, major brokerage firms ran full page ads in the Wall Street Journal, USA Today and New York Times with news of how they were now putting their clients first and eliminating commissions within retirement accounts. But then, in 2017, the Trump administration delayed the implementation, eventually vacating the rule. Now that the fiduciary rule is dead, large brokerage firms that started to alter their business plans once again allow commission-based business, reversing course from the full page ads. Business models will continue to evolve and change, but Investment Advisors who were already operating under the fiduciary standard, such as Cahill, continue to do so. We remain fee-only, do not charge commissions, and act in your best interest.

Defining Our Terms

As financial advisors our job is to listen, develop, redirect, change, implement, and monitor advice based on our client’s unique set of goals and objectives. The definition of advising is to tell someone what should be done. Delivering only good news or news someone wants to hear is not advising. We need to be the expert, the voice of reason, and more importantly a voice of trust. We put clients first – their goals, objectives and personal situation are the driving factors in how Cahill creates solutions. Our clients hire us to be the experts for them, and to act in their best interests at all times.

Take for Example

Suppose you’re heading out to buy a car. You find a used car that fits your needs perfectly. It’s two years old, has low mileage, is in great condition, and $12,000 cheaper than a new model. The sales department works through the financing and the monthly payment comes in under your budgeted amount. Great deal, right? What the sales department forgets to mention is tomorrow the car manufacturer is announcing a new rebate program and discounted pricing on all year-end remaining new models. With the rebates and discounts you could buy a brand new car, same model, for an additional $100 per month. If the sales team would have taken a fiduciary obligation it would have been in your best interest to know about tomorrow’s sale. You might still buy the used car, but knowing you have the option to buy new tomorrow for much less may have changed your mind.    

Why You Deserve a Fiduciary

• The advisor must place his or her interest below that of the client.
• The advisor is prohibited from buying securities for his or her account prior to buying them for the client
• The advisor must do his or her best to make sure investment advice is made using accurate and complete information. The analysis must be as thorough as possible.
• The advisor must avoid conflicts of interest. As a fiduciary, an advisor must disclose any conflicts of interest or potential conflicts of interest.

As a fee-only registered investment advisor we believe the fiduciary model is good for our business and our clients. We want to develop a partnership to collaborativlty work with our clients by providing the necessary knowledge, resources and education to help facilitate your decisions throughout your financial journey through independent, unbiased advice.   

The information contained in this article has been gathered from sources we believe to be reliable, but we do not guarantee the accuracy or completeness of such information. The information herein is for illustrative purposes only. Individuals should compare services and fees of all potential financial professionals thoroughly before deciding if a certain advisor or services are appropriate for their needs.  All investments and investment advice provided bears a risk for loss. This is a general education article, and should not be construed as tax or legal advice, and may not be the applicable to your specific situation. Please consult an appropriate tax, legal, or financial professional for advice specific to your individual needs. Please read more about Cahill Financial Advisors services, fees, and other comprehensive information about our firm in our Form ADV Disclosure (link in footer).

[1]Laxaroff, Peter. “Is your advisor a fiduciary?” July 16, 2018.