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Thursday, October 30, 2014

I Am a (Fiduciary) Zealot, for I BELIEVE

I admit it. I'm a "believer." Yes, I am even a "fiduciary" zealot.

I believe when you say, "I act in my client's best interest," it means never placing your interests above that of the client. No caveats. I believe that core fiduciary duties cannot be waived by clients, nor can disclaimers of fiduciary duties be upheld as legitimate.

I believe when you say, "I provide objective advice," it means that conflicts of interest are avoided.

I believe conflicts of interest cannot just be "disclosed away," and that if a conflict of interest is unavoidable then full and complete disclosure must be affirmatively undertaken in a manner to ensure client understanding and to secure the client's informed consent, and even then that the suggested course of action remain substantively fair to the client. For no client would ever consent to harm.

I believe when you say, "I am a fiduciary," it means that you cannot push proprietary products, engage in principal trading, receive additional compensation for recommending one product over another, receive revenue sharing payments (including payments for shelf space or 12b-1 fees), or even receive soft dollar compensation.

I believe when you hold out as an advisor (as opposed to a salesperson), whether by use of the terms "financial consultant" or "financial advisor" or "financial planner" or "wealth manager" or any other similar terms, or by using designations such as CFP(r) or ChFC, you represent yourself as a trusted advisor, and should accordingly act as such at all times. I believe that holding yourself out as a trusted advisor, and not accepting fiduciary status and its burdens and restraints upon conduct, is tantamount to fraud.

I believe that each person should honestly, and forthrightly, say what he or she does, and then should do what he or she says.

I believe that once you accept fiduciary status toward a client, it extends to all aspects of your professional relationship of the client, and that the fiduciary hat cannot be removed.

I believe it is not possible to wear two hats at one time. (And a lot of jurists agree with me.)

I believe that, by either holding out as a trusted financial advisor, or acting as same, you are bound to exercise a professional level of due care, requiring expertise and experience and sound judgment.

I believe, to paraphrase the late Justice Benjamin Cardoza, that the fiduciary standard should not be diminished by "particularized exceptions" which are developed over time.

I believe that I am a steward of my clients' wealth. It is not there for me to play with. I must deal with it prudently, and wisely, applying my vast knowledge of the workings of the capital markets to seek to achieve my client's lifetime financial goals.

I believe I am a professional, and that we, as professionals, place the interests of the public ahead of our own.

I believe as a trusted expert advisor I am entitled to professional-level compensation - not more, and not less.

I believe that the application of a bona fide fiduciary standard to personalized investment advice, in this ever-more complex financial world, is inevitable. Perhaps not this year, or even this decade. Perhaps not even in my lifetime. But some day.

I believe that promotion of the fiduciary standard will continue, as advocates (such as those in The Committee for the Fiduciary Standard - continue to seek to aid our fellow Americans to receive the honest, trusted advice they all so richly deserve.

I believe that, following the imposition of a bona fide fiduciary standard for all providers of financial and investment advice, the demand for financial planning and investment advice will soar, Americans will become more trusting of the capital markets, the cost of capital will decline, and fuel will be provided to propel America's economy forward.

I believe in the Fiduciary Oath. I believe every single consumer of financial and investment advice should absolutely insist upon the signature of his or her financial or investment advisor to such oath.

I believe that fairness will prevail over greed, right over wrong, and trust over betrayals of trust.

I believe.

I will continue to believe.

Ron A. Rhoades, JD, CFP(r) serves as Asst. Professor in the Business Department at Alfred State College, where he serves as Curriculum Coordinator for its Financial Planning Program. To learn more about Ron, please view

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