727.441.9022
611 Druid Rd E • Suite 105 • Clearwater, FL 33756
V. Raymond Ferrara, CFP®
Chairman
Chief Executive Officer
Eric R. Ebbert, MBA, CFP®
President
Chief Operating Officer
Who Cares If Your Advisor MUST Act in
Your Best Interests?
Of course, you should. You probably think
that your advisor is required to do so, but
when did you last ask? “Do you act as a
fiduciary and at all times act in my best
interest instead of your own?” If the simple
answer isn’t “Yes”, but instead you get a
whole big long explanation, then there is a
high probability that they are not required
to act in your best interest.
Do you trust your financial advisor(s)? Of
course you do, otherwise you would not be
listening to him/her. Yet many polls show
that most investors do not trust Wall Street.
But for most of us, trusting our financial
advisor is easy; it is everybody else’s advisor
that cannot be trusted. It is a lot like talking
about our representative to Congress. Ours
is great; it is all the others that are not so
good.
Financial advisors often work under two
different standards – suitability and fiduciary.
There can be a world of difference. Under a
suitability standard, the advisor need only
come to the conclusion that an investment
is “suitable” for you given your financial
circumstances, knowledge, station in life, etc.
It may not be in your best interest, however.
How can that be? Suppose there are two
investment products that the advisor is
considering as a recommendation. One of
the products has slightly better past
performance, which of course is no guarantee
it will in the future, and the other pays a
higher commission. Both are suitable, but
what if the advisor sells the one with higher
commissions instead of the one with better
past performance…was it in your best
interest, or the advisor’s?
Under a fiduciary standard of care, the
advisor must always offer advice by placing
your interests ahead of his/her own and act
with the skill, diligence and good judgment
of a professional. He/she must provide
complete disclosure of all the relevant facts
and any conflicts, like the one above. If the
conflict is unavoidable, then it must be
managed in your favor. In a fiduciary
relationship, the advisor would not be able
to “sell” the higher commission product when
the other product was likely better for you.
At ProVise we have worked with all of our
Registered Investment Advisor (RIA) clients
at a fiduciary (your best interest ahead of our
own) standard of care since 1988.
The Department of Labor (DOL) is
proposing a rule that would require all
advisors who work with investors in pension
plans, IRAs, etc. to do so at a fiduciary
standard of care. Ray Ferrara, our Chairman
and CEO, had the honor of being one of the
first to testify in favor of this proposal with
some modifications before the DOL, while
unfortunately much of the financial industry
is opposing it as “unworkable”.
When working with a financial advisor
there is no reason for them to not work in
your best interest. Fortunately, many do even
though they are not required to do so. But
how do you know for sure? Ask them if they
are a fiduciary in their relationship with you.
About ProVise Management Group, LLC: ProVise is a financial planning and investment management firm registered with the Securities and Exchange Commission
(SEC) and have been in business since 1987. Our 12 professional advisors serve approximately 950 clients in over 30 states. As of September 30, 2015 we were managing
approximately $1.2 billion for our individual, corporate, not-for-profit, and 401k retirement plans. Please visit our website at: provise.com. Investment Advisory Services
offered through ProVise Management Group, LLC.
MARCH/APRIL 2016 TAMPA BAY MAGAZINE 65