SO WHAT DOES ‘FIDUCIARY’ MEAN AND WHY IS IT IMPORTANT?
As a fiduciary, we commit to a high level of trust to our clients and must put your interests above all others, including our own. In fact, as a SEC registered investment advisor, AHC Advisors is legally required to act as a fiduciary to our clients. It’s the law; but in our eyes, helping our clients make the financial moves that benefit them most is simply our professional duty. We wouldn’t have it any other way.
Some financial advisors wear a Fiduciary “Hat” when they work with new clients to put together an investment plan. But, when it comes time to sell you the investments that they put in your plan they take off the fiduciary “Hat” and instead sell you an investment that is suitable for you, rather than in your best interest. This is common in the investment industry. Ask your investment advisor to put in writing that they will act as a fiduciary to you AT ALL TIMES.
NAPFA, the National Association of Personal Financial Advisors, offers the following definition of a fiduciary, which we support, adhere to, and advocate:
The definition of Fiduciaryfi•du•ci•ar•y – A financial advisor held to a Fiduciary Standard occupies a position of special trust and confidence when working with a client. As a Fiduciary, the financial advisor is required to act with undivided loyalty to the client. This includes disclosure of how the financial advisor is to be compensated and any corresponding conflicts of interest.
NAPFA firmly believes this is the strongest definition of Fiduciary available because of the basic requirements of Trust, Loyalty, and Disclosure.
Trust – Someone who does not completely trust their financial advisor can never be fully confident that they are receiving the best possible advice from the best possible advisor. Without trust, can confidence really be achieved?
Loyalty – An advisor who is loyal to only their clients will not be swayed by outside forces to recommend investments with higher commissions or payouts. Without loyalty, can people ever be sure their own interests are being looked after?
Disclosure – People must know, and understand, how their financial advisor is being compensated for the advice they are providing and whether or not any conflicts exist that may cause a problem with that advisor’s ability to provide truly independent advice. Without disclosure, can prudent advice be provided?