The Power of Comprehensive Fiduciary Advice

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Written by: Drew Tignanelli

As I get older, I find myself visiting more doctors who are specialists: dermatologists, urologists, ophthalmologists, and ENT, orthopedic, and sleep specialists, to name a few. Fortunately, I have a concierge general practitioner who is comprehensive and knows my entire medical history.  He typically refers me to these doctors, but not always. However, I wisely go to him and verify the path that each specialist desires to take.  Why is this wise? Because he knows my health better than I do, and he has a greater depth of understanding. These specialists are fiduciaries, but more and more, they have an economic bias. These specialists often own their own outpatient surgical facilities and have upgrades that Medicare has not approved. Medicare is continuing to squeeze their profit margins so that any out-of-pocket expense a doctor can get a patient to pay is highly profitable.  Any higher value Medicare procedure they can bill is highly profitable.

Take the medical example above, which is still a profession with highly educated, trained, and ethical physicians, and compare it to the financial services profession. There are limited education and training requirements. There are some fiduciaries in financial services, but most in the industry are not held to a fiduciary standard, for it has been predominantly the domain of salespeople. CPAs and lawyers are two professionals in financial services, and they are highly educated, trained fiduciaries, but their economic bias is TIME. Yes, time is their bias, because at $200 to $1,000 an hour, they normally only want to do what you will be willing to pay for. Regardless of whether charging a fixed price or by the hour, the lawyer knows how much time to spend on a last will and testament before it becomes unprofitable or creates an angry client with a very large legal bill. The CPA doing your tax return has the same problem, and so they prepare the return and move on to the next return, for time in cost and time to file are both against them. Stockbrokers have a thin liability veil called “suitability” which merely means any product is good if the investment concept meets within the parameters of the client’s risk tolerance.  This thin liability veil creates an atmosphere for outsized profits.  Real estate agents and insurance agents have minor liability exposure for the recommendations they make, therefore creating a potpourri of economic bias.  This is why the comprehensive personal fiduciary advisor is as important as the general practitioner of medicine.

I see it too often: without discussing it with us, a client goes off and talks with an attorney about estate planning. There are law firms we warn clients not to use. There are law firms that are great, but the fees are too high for the client’s needs. There is legal language that may help or hurt in any document. Clients do tax returns without our review, and then we review and find mistakes. We may review but have missed the April 15^th deadline to make some planning moves. Perhaps we never review, and invisible losses are sitting on the return, possibly never to be found. Tax planning opportunities for the current tax year are missed because we never got to review the return prepared for the previous year. Clients go to insurance agents without discussing it with us and are under-insured, over-insured or wrongly insured. The client always has the final say, just as with a medical doctor, but you need good comprehensive knowledge before moving forward.

Unfortunately, there are few educated, trained fiduciary advisors, and marketing blurs the image of financial advice. The only sure fiduciary advisors are ones who are affiliated with the National Association of Personal Financial Advisors. There are over 300,000 financial advisors in the US, and less than 4,000 are willing to hold to the NAPFA Standard of being educated, trained, fee-only®, comprehensive fiduciaries. We need your help to educate your family, friends, and colleagues, because when it comes from us, it is the same as all the rest.

Talk to your Consulate Advisor before going to an estate attorney.  Talk to us before getting auto, home, life, long-term care, disability or medical insurance.  Have us review your tax return every year before April 15^th.  Let us know if you have questions about Social Security or Medicare.  When open enrollment begins for your company benefits, call and review your decisions.  Your comprehensive Consulate Advisor should always be your first stop for dealing with anything financial.

Financial Consulate aims to help lessen the worry and burden of wealth management and enhance financial wellness so our clients can pursue relationships and true fulfillment. Choose the professionals at Financial Consulate as your Certified Financial Planners™ (CFP®) to take advantage of our educational, ethical approach to financial planning. Our services are comprehensive, including tax planning, investment planning, retirement planning, estate planning, and more. We operate completely independently and offer fee-only services to keep your vision in line with our recommendations at all times. While we have offices in Hunt Valley, Maryland, Fernandina Beach, Florida, and Gettysburg, Pennsylvania, we serve clients across the nation. To begin your partnership with a trustworthy wealth advisor, please contact Financial Consulate today.