Abacus Planning Group is on the Chairman’s Council that created the Best Practices for the Institute of the Fiduciary Standard. “These Best Practices summarize better than anything I've seen the way that we want to show up in the world as financial professionals,” said Abacus’ Jon Robertson, a financial advisor in Columbia, S.C. who is also among the first class of Best Practices Advisors. “There are many advisors out there where it might be a little bit of a reach for them to be able to say that they do all of these Best Practices but there’s plenty of time for advisors to change their practices to fully embody these affirmations.”
The first of the Institute's proposed 12 practices calls for advisors to affirm the fiduciary standard under the Investment Advisers Act of 1940 and, if applicable, ERISA and the Department of Labor’s Conflicts of Interest rule, govern all professional advisory client relationships at all times.
“This means that as advisors we have a fiduciary relationship to our clients all the time,” said Daniel B. Moisand, a CFP and Best Practices Advisor at Moisand, Fitzgerald, Tamayo, an RIA in Melbourne Fla. “We never switch hats. That's the bottom line. That's what clients want even if they don't know the term that they're supposed to use in a legal environment to describe it.”
Another of the Best Practices is to give a good faith estimate of all costs involved.
“Most advisors who are full-time fiduciaries won't have to do a whole lot of things radically different if they become a Best Practice Advisor,” Moisand said. “They’ll just need to get a little more precise in their documentation of assessment of costs.”
The second class of Best Practices advisors is reportedly lining up to be announced by the summer.
"Best Practices advisors, like other respected professionals, do more for their clients,” Rostad said. “They meet rigorous and concrete standards. They publicly and plainly demonstrate to investors and regulators what they do for clients. They demonstrate how fiduciary duties are translated into tasks and deeds that investors understand and value.”