- Wirehouse advisers use financial planning tools to guide the client but do not offer planning advice in a fiduciary capacity.
- The standard is determined by how much discretion the client has authorised the adviser and firm. Wirehouses using entirely discretionary platforms would have a higher degree of liability. Advisers might still offer advice in non-discretionary situations but clients would need to acknowledge it is not a fiduciary relationship.
- Advisers choose whether to be brokers or advisers and clients agree to a relationship based on qualifications and accountability for advice offered. Pricing is commoditised on the lower tier.
Good behaviour cannot be legislated. Investors should ask: “Do I trust my adviser? Is he working in my best interests? Has he told me what I am paying in direct and indirect costs? Is he accountable, delivering bad news even if I might choose to leave the relationship? Do I understand that even well-intentioned people make honest mistakes?”
Bryce Sanders is president of Perceptive Business Solutions
- How will wirehouses address fiduciary standards that are part of the CFP ethics code?
- Most would agree that if a client followed instructions and the investments went drastically awry, someone should be accountable, and it is not the client – at least in their minds.
- Good behaviour cannot be legislated, so it is up to investors to decide on the suitability of their advisers.