Broker Check

Fiduciaries for the Middle

| January 02, 2019

"Act only act in clients' best interests"

Checking Google,  I just got more than 20,000,000 hits for the word fiduciary.  I like my definition above because it is meant to be easy to understand I believe it is on point.  Some long-time readers know I served active duty in the US Army. Part of my initial 2LT Training was the definition given about any commanders' duties: The commander (e.g. Platoon Leader) is responsible for everything that happens or fails to happen in the commander's unit. So extending my thinking to fiduciary, a failure to act or a conscious decision to not act can be a fiduciary failure

Executive Summary

  1. Act only in clients' best interests.
  2. Fiduciary must have critical and up-to-date information and documents. (Fiduciary might be but is not required to be exclusive financial provider.)
  3. Complexity might be a more critical issue than dollar amount.
  4. Find out what each of the financial team members might be doing with you or your finances.
  5. Ask a potential Fiduciary to explain their Overall Philosophy.
  6. Before you commit or sign anything, understand any lock-ins or penalties to leave or make future changes.
  7. Fiduciary principles include financial planning principles ... but
  8. One size does not fit all.  Algorithms, models and / or preferred providers are not necessarily wrong. But might be suspect if applied to great majority of clients.
  9. Implementation is agnostic and must always be in clients' best interests. Unless a Fiduciary has a very small client base the use of any one identical financial service, product and / or provider across a great majority of clients is IMPO possibly not Fiduciary.
  10. We gratefully accept new clients who want a Fiduciary. (Not everyone does!)

Gratefully accepting new fiduciary clients ...

We gratefully accept new clients wanting the Fiduciary Standard. Before you might become a client - or pay anything or make any financial changes, we also are very happy to have no-charge phone conversation(s) about our professional opinions of the Fiduciary Standard and our fiduciary process. And we need to have at least one no-charge phone conversation about your specific situation with all the relevant people present on that call. Because we actually can not accept a Fiduciary client unless we know we can add value. And we don't know if we can add value until we know your specifics. The possibility of both relatively fast and financially significant Pattern Recognition by a long-experienced CFP®-Certified Financial Planner® - might possibly mean that associating with a Fiduciary might be more affordable than you might guess. Compensation flexibility might also make a difference.

Who share our Fiduciary views:  While we currently accept only clients philosophically aligned with our Fiduciary views, Fiduciary flexibility might be greater than you would think. You might want ... to hold some investments in a "do-it-yourself" account ... or want financial planning only .... or you might want us to have complete discretion. These are the kinds of process issues and choices we are happy to address with you on the phone before we actually begin any formal relationship that might occur with you.

We do not impose our own dollar minimum:  We ourselves do not at this time require any specific implementation and / or dollar minimum. We do work with many outstanding third-party professionals and organizations that often do have their own - we feel reasonable - dollar minimums.

Fiduciary must have critical up-to-date information and documents.

It's impossible to act as Fiduciary without all the critical information. Keeping a "side fund" that Fiduciary doesn't know about - or perhaps personal or business info, negates the ability to maintain the Fiduciary standard. I have said elsewhere that I don't require exclusivity. If you happen to be in a position where you need to turn over everything to a Fiduciary, that is an option. But not a requirement.  So as a potential Fiduciary, I don't have to have everything. But I must see everything.


Complexity is potentially more important than just dollar amount

Some people may be in a position where they have their own Family Office. I consider that above the Middle. Others might use the services of a Multi-Family Office. While I would have to know details, that is possibly above the middle.  Much more typically - I will use the married example because there is more complexity. You might have a Qualified Plan (e.g. 401-k, 403-b) at a current employer. Spouse might, too. Maybe one of the spouses also has a Qualified Plan account at a previous employer that wasn't ever moved. Maybe the other spouse had one of those, but transferred it to an IRA. Maybe there is a joint account that is non-qualified with some investments. Perhaps there is life insurance on one or both spouses. LTCi - Long Term Care insurance - can be critical for married people planning to retire (or already retired) using one bucket of resources. Even if neither spouse has an actual pension - becoming more rare these days - both spouses likely have Social Security accounts.  I intentionally did not say anything about the amount of money or coverages in any of these items.

Understand each team members' qualifications and responsibilities to you

I believe it is critically important to understand the competence, experience, training and education of any Financial Folks working with you. It also is important to understand the players. It might be possible for there to exist a true Solo as well as Fiduciary Financial "Folk." But if they exist they are a very small minority. So it becomes important if you happen to be previewing a possible Financial Person to understand what that person will do - and what kinds of things others might do. Depending on the answer, you might also want to interview any Team Members with whom you will be having ongoing communications.

Financial Planning Philosophy & Approach - 30,000 foot level

I have at times used the medical analogy which I feel might work. Competent, even outstanding medical pros might differ. Also true for Financial people. So in a previous post I put up a chart that shows some advantages and disadvantages. I have added it at the bottom of this post.  There is rarely just one "right" answer IMPO. Having the goal of becoming or staying financially strong and eventually having the possibility of becoming financially independent can be complex. My understanding and practice of the Fiduciary Standard requires looking at advantages and disadvantages. And I must consider the possibility of a wide range of financial choices.

No-charge phone conversation to discuss your specifics before you commit or make any changes

I am unable to tell whether or not I might be able to make a potentially positive difference to a possible client until I understand their situation. So I will typically have multiple communications of various types. And look at documents. I don't create or provide a free financial plan. But I will have a phone conversation with them about their situation. All of that is at no charge, no-obligation and there has been no paperwork signed or money changing hands or transfers. A related point is that there are fewer and fewer situations where it makes sense for the clients to get into something that has a surrender charge or penalty to get out. It does happen. And where an industry or product structure makes that the only available choice, sometimes it is in your interests. As long as you understand why.  

Ask questions. Become a well-informed consumer of financial services.

"One Size Fits All" may not be Fiduciary

Some financial folks use algorithms and / or models. This IMPO is not necessarily outside Fiduciary standard. But if they are using the same or similar for the very great majority of clients, that might deserve a closer look. It is also the case that a completely customized, one of a kind solution is very likely going to be more expensive for clients. Advantages & disadvantages of significant financial choices must be made. Below is a chart originally posted in early 2016 that still bears examination.



 (Originally posted March 29, 2016)







Upside growth potential

Principal safety

Guaranteed (joint) lifetime income available

Guaranteed (joint) lifetime income available

Available very low expenses

Stable income

Guaranteed against market loss

Possible permanent raises during income phase


Return of principal at maturity

Possible permanent raises during income phase

Lock in gains for income

Understand what you own


Lock in gains for income

Upside potential

Track index

Safe - conservative - but not guaranteed

Access to your money
Return of Premium available

Access to your money







Potential market loss

Low current interest rates

Limited growth potential



Little inflation protection

Upside limits: Caps,  participation rate

Growth reduced by expenses


Limited growth potential

Surrender charges limit access

Surrender charges limit access


Possible market loss before maturity



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