Author: Ryan W. Neal
May 25, 2016
New campaign will help investors find and screen fiduciary advisors
The Institute for the Fiduciary Standard has advocated for a fiduciary standard since Knut Rostad helped found the organization in 2011, but it isn’t about to rest on its laurels now that the Department of Labor has introduced a fiduciary rule.
On Tuesday, the Institute launched the “Campaign for Investors” initiative to help put the fiduciary standard in context for investors by providing educational tools and resources. The goal is to inform investors on what to expect and insist on from a financial advisor, as well as help them find, screen and evaluate an advisor that fulfills those requirements.
The Campaign for Investors also aims to help advisors adjust their business to serve their clients’ interests and remain a valuable resource.
The campaign includes a new “Investor Bill of Rights,” which distils the Institute’s 11-page document on advisor best practices into a 10-point list.
I expect that my fiduciary advisor
- Meets the highest standards and puts my interest ahead of his/her own at all times.
- Understands my circumstances, needs, goals and risk tolerance.
- Puts our agreement in plain writing that includes an investment policy statement or process that reflects my goals and philosophy.
- Provides communication that is timely, truthful, complete and understandable so I am well informed. Puts important agreements in writing.
- Gives me advice that is objective and unbiased and based on my needs.
- Is educated and credentialed in personal finance and investing, dedicated to professional education and experienced in advising investors like me.
- Reports regularly on my investments’ performance, the fees and expenses I pay and the fees the firm receives as a result of advising on my portfolio. On request, provides written records that explain any recommendations.
- Avoids conflicts of interest. If a conflict is unavoidable, the advisor discloses the conflict, discusses it with me and manages it for my benefit.
- Avoids receiving payments from other parties (like mutual funds). If unavoidable, the payment is either credited to me or managed for my benefit.
- Controls investment expenses so the fees and expenses I pay are reasonable.
“The principles that we’re talking about have inspired the leaders of this budding profession since its origin,” Rostad said at a kick-off event at the National Constitution Center in Philadelphia. “The campaign believes most of us have experienced the benefits of advice at some time in our lives, be it from a good friend, a family member or a trusted expert. Likewise, we believe investors can benefit from excellent financial advice.”