Soon I will have my dreaded annual appointment with my doctor. There is a high chance she will make me go through at least one uncomfortable test, tell me to take it easier on my knees and back by playing less golf and tennis, and perhaps even give me a shot.
In general, I follow her advice (except the less golf and tennis part) because I believe my doctor has my best interests at heart when she makes recommendations. But what if my doctor worked directly for a company like Pfizer whose main business is selling a specific product? For example, say I developed a heart condition. If she prescribed a Pfizer drug, would I be confident that the prescription was the best solution to my condition, or was it simply the one her company was selling? How would I know?
In the financial world, we like to believe that all advisors have always acted in their client’s best interest. As odd as it sounds, prior to a recent Department of Labor ruling, not all financial advisors were required to do this. Most simply had to recommend investment products which were suitable, but not necessarily in their clients’ best interests.The DOL set forth a requirement that any Financial Advisors working with retirement accounts had to act in the client’s best interest, acting as a Fiduciary to the client.
The term Fiduciary brings with it the responsibility of doing what’s right for the client, not just what may be an okay investment the advisor was previously incentivized to sell.This change may hopefully lead many advisors towards more diversified, efficiently-priced investment options. In our view, this would be a win for everyone, especially investors. At Mesa Financial Group, we’ve always believed that investors should work only with advisors who have a fiduciary duty.
In our next article, we’ll provide you some key criteria to look for in a Financial Advisor to ensure your advisor not only truly has your best interest in mind but is actually working in an environment that requires it by law.
In the meantime, don’t hesitate to reach us with any questions. We’re always happy to help.