Hiring someone to manage your financial assets can be challenging. A continually changing investment landscape and often-complex products offered by well-marketed providers can make it difficult for investors. How can the investor limit their risk and ensure industry best practices are used in the management of their portfolio? One answer is to make certain your advisor is a true fiduciary.

As of August 2021, Foster Group is one of approximately 245 firms worldwide to hold certification as a registered fiduciary through The Centre for Fiduciary Excellence (CEFEX). Annual re-certification is required to maintain this status. Foster Group is the only firm in Iowa and Nebraska that has been certified since 2007.

The word “fiduciary” comes from the Latin “fiducia,” meaning “trust.” It refers to an individual or an entity with the power and obligation to act for a beneficiary under circumstances requiring total trust, good faith, and honesty. Characteristically, the fiduciary has greater knowledge and expertise about the matters being handled than does the beneficiary. A fiduciary is legally held to the highest standards of conduct and trust.

Many reasons have been offered by those preferring not to operate according to a fiduciary standard. Remember the main issue for investors, though; would you rather have an advisor guide you in a way that is solely in your best interest, or something less?

How would an investor know if their advisors adhere to this fiduciary standard? Three criteria, provided by the Department of Labor, suggest that to demonstrate compliance, advisors and/or financial services firms should:

  1. State, in writing, that the firm commits to providing advice in the client’s best interest at all times
  2. State, in writing, that the firm has adopted policies and procedures designed to mitigate conflicts of interest
  3. Clearly and prominently disclose any conflicts of interest, like less-than-transparent fees or backdoor payments that might prevent, or provide a disincentive to, the advisor from providing advice in the client’s best interest

Among other things, CEFEX-certified advisor firms are expected to:

  • Demonstrate awareness of fiduciary duties and responsibilities
  • Identify conflicts of interest and address such conflicts in a manner consistent with the duty of loyalty
  • Identify an appropriate risk level for each client
  • Utilize investment policy statements which contain sufficient data to define, implement, and monitor the client’s investment strategy
  • Document decisions regarding investment strategies and recommendations and make such decisions in a manner consistent with fiduciary obligations of care
  • Conduct periodic reviews to ensure investment-related fees, compensation, and expenses are fair and reasonable for the services provided

We’re absolutely committed to acting as our clients’ fiduciary.  We think you deserve, and should expect, nothing less. Contact us today to learn how well your investments can be managed and get on the road to fiduciary security.