Broker Check

To be effective, your fiduciary must have all the data and documents

Executive Summary

A financial fiduciary might be operating under all of the required laws, regulations and guidelines.  Those processes should include requiring all the information and documents.  Because the fiduciary standard is open to more interpretation than might be desirable, many financial "folks" with the proper licensing etc. may not actually be functioning as true fiduciaries because they fail to gather all documents or keep them updated and complete.

Do you have a 100% exclusive relationship or do you use multiple advisers / brokers / agents?

It is not uncommon for some very experienced advisers to require a 100% exclusive relationship.  Such an exclusive relationship makes it simpler to fulfill the fiduciary duty.  While I do not require that 100% exclusive commitment, I do require 100% of the information and documents.  It is impossible to act or advise the clients using the fiduciary standard -- their best interests -- if I don't know everything that they have.  An accurate asset allocation would be impossible.  As would a financial risk and insurance assessment.

Yet, in the real world, I have frequently heard clients and others admit to having placed assets elsewhere for the specific reason of not making their "primary" adviser aware of such assets.  This is like taking a prescription from a second MD without telling her what other prescriptions and supplements you are taking ... yikes ... potential drug interaction!

Just providing all the information and documents is a lot of work

I started a list of all the documents that clients might have, including the following 


  1. Bank checking & savings
  2. Mortgage
  3. Credit card
  4. Investments non-qualified
  5. Investments IRA
  6. Investments 401-k
  7. Annuity
  8. Life Insurance
  9. Long Term Care insurance
  10. Disability insurance

As well as these other documents

  1. Beneficiary Designation Forms
    B. Will
    C. Trust
    D. Powers of Attorney
    E. Health Care Proxy
    F. Income Tax
    G. Questionnaire -- risk tolerance, goals, values etc.

Fiduciary ... CFP®PROFESSIONAL ... DOL -- Department of Labor potential standards

To become a licensed MD, you must qualify in a variety of ways.  Ditto attorney, CPA.  And Registered Rep / Investment Adviser Representative and CFP® PROFESSIONAL, for that matter.  But once qualified, the enforcement of professional standards varies.  An MD at a major academic medical center will be subject to detailed scientific scrutiny.  Moreso than a sole practitioner in a strip mall. Financial folks are similar ... and they have different kinds of qualifications and training.

If your financial professional asks you a bunch of nosy questions and requires a bunch of confidential and sensitive documents, its a better bet that she / he is following the fiduciary standard.  Good for them ... and ... better for you!