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Who Do You Trust in the Financial Services Industry?
While I think about this issue quite a bit and attend many industry sessions on this topic, I have shied away from writing in any detail about this issue on this blog. I do address the issue of fiduciary responsibility on our web site and in the videos on our web site. But, this morning I read this article about the latest large investment house to pay a multi-billion dollar fine for wrongdoing related to the housing/mortgage mess of a few years ago. I found it quite astonishing when I sat back and thought about the fines that these firms have agreed to: Morgan Stanley ($2.6 billion), Citigroup ($7 billion), Bank of America ($17 billion), JP Morgan Chase ($13 billion), Goldman Sachs (still 'negotiating'). I then thought: how is it possible that they have any clients left? If a small independent firm was fined, they would probably lose all their clients over night and be out of business! Is it possible that folks who have their money at these larger firms have adapted to the wrongdoing of these companies (and associated fines in the billions) that they just see it in the press, expect it, and then move on to something else? I'm pretty sure that is the case unfortunately.
I have decided that being a fee-only fiduciary financial planner is the best way to offer professional advice to the public. Being fee-only best aligns the advisor's interests with the client's interests, and accepting a fiduciary level of care provides clients with a certain level of comfort knowing that their advisor has a legal responsibility to act in their best interest.
The National Association of Personal Financial Advisors (NAPFA) offers a nice infographic on how to find a financial advisor. The title of this blog asks: who do you trust? While there are many folks out there who will choose to do things on their own, there are plenty of people who want and need professional financial advice. While there are never any guarantees, I think a good place to start is by looking at advisors who adhere to a fee-only, fiduciary standard. If you or someone you know is looking for professional financial advice, I would encourage you to use some of the links provided in this blog post as a resource.