The Fiduciary Standard Debate

How about ethical standard where the advisers put customer's overall need to keep the expenses to a minimum and sharing the risks (if the consumer loses, the adviser loses also) and putting self-serving profit for the adviser dead last.

When I asked one financial adviser why he does not sell me no-load mutual funds and only the high front load mutual funds, he told me "because I don't make any money."

Which is why hiring an advisor who acts as a Fiduciary is in your best interest. Fiduciaries are required by law to make decisions that are best for YOU, the consumer/investor, rather than for them.

I've had difficulty finding "an advisor who acts as a Fiduciary is in your best interest." What titles or initials does one look to be sure he/she is acting on my behalf. Is CFP acting as a Fiduciary? Is CPA? How do I check their background?

Not necessarily a CFP. from the CFP Board's website:

Q: Why doesn't CFP Board just say that all CFP® certificants are fiduciaries?
A: The Second Exposure Draft does say that all CFP® certificants who provide financial planning services will be held to the duty of care of a fiduciary, as defined by CFP Board. The Second Exposure Draft also proposes that CFP® certificants "shall at all times place the interest of the client ahead of his or her own," regardless of whether financial planning services are provided to the client.

CFP® professionals may be engaged in a wide range of business activities unrelated to financial planning, and it would be inappropriate for CFP Board to impose a fiduciary standard in such situations. For example, CFP Board would not expect a CFP® professional seeking to sell his or her own home to put the buyer's interest ahead of his or her own. In such a situation, the buyer is typically not a client, and such a relationship would not invoke the fiduciary duty of care in the proposed ethical standards.

For a true fiduciary, look to a registered investment advisor or CPA. If you want to learn more about an advisor, www.financialadvisormatch.com has a directory with over 1.7 million advisors, including descriptions of types of advisors (RIA, Registered Rep, etc) and links to the advisors regulatory bodies. There are other sources for researching advisors available elsewhere on the web, but as you may have guessed from my screen name, I am a little biased towards FiancialAdvisorMatch (FAMatch)

It is unfortunate that these so-called professionals use the term "Financial Adviser" very loosely. An insurance agent will proudly tell me that he/she is a investment advisor, or investment broker suddenlt turns into "financial advisor" with bunch of other initials afetr their name. A layman would not easily be able to distinguish a loose cannon from a true certificant who is fiduciary to the core. It is still a "caveat emptor" world.

Coincidentally, that is exactly the reason that the FPA has called for tighter regulation over the term Financial Planner. Read more on that here: http://www.moneymanagement.com.au/Article/FPA-calls-for-regulatory-control-of-use-of-term-financial-planner/490545.aspx

Does this article from Australia really help us in the U.S.?