How We Show Our Undivided Loyalty to Our Clients

Fee-only fiduciary for all clients at all times

As a fee-only fiduciary for all clients at all times, we eliminate the most pervasive conflict of interest in financial services…receiving compensation from third parties. This fosters trust, something we need more of these days.

Wow! That was quite an election.

Candidates at many levels of government have been running negative campaigns for centuries but this one felt particularly nasty.

We have come to expect the respective campaigns will claim that no one from the other party can be trusted. However, there has always been people we could rely on for a more objective viewpoint. It wasn’t that long ago when a TV anchorman was regarded as the most trusted man in America. In this election, with even more messages being thrust at us, it was hard to feel confident that anything we read or heard was accurate.

We miss you, Walter Cronkite.

fee-only fiduciaries foster trustOne of the consequences of all this noise that we hope will gain momentum is a renewed attention on trustworthiness. Reliable sources of information and analysis are as important, but harder to find, then ever.

This year, the Department of Labor finalized a new “Conflicts of Interest” (COI) rule requiring people who give advice to retirement plan participants and IRA owners to act as fiduciaries and put the interests of those they advise first. We have worked exclusively as fee-only fiduciaries for years but most of the financial services industry does not. Brokerage, insurance, and banking interests have been lobbying hard and filing lawsuits to stop the rule from taking effect in April. The issue was politicized and its future is in doubt.

This is a shame because every credible study done on the matter shows the public cannot tell who is acting in a fiduciary capacity for them – legally obligated to put their interests first – and who are regulated as salespeople for financial firms under a lower standard of “suitability” or the even lower caveat emptor (buyer beware). Everyone seems to market themselves as “advisors.”

We don’t know what will happen to the DOL rule. (Note: The 5th Circuit Court struck down this rule in early 2018 after brokerage firms proved their representatives were only salespeople and did NOT give advice.) If it stays on the books, it doesn’t apply to non-retirement accounts so it is only a partial step in a good direction anyway. Confusion should still reign as firms advertise their fiduciary status for retirement accounts and leave out the part where they were against the rule and are only subjected to fiduciary duty because they have been forced to change, partially.

What we do know is we don’t have to wait for Washington to get its consumer protection act together.

Fee-only fiduciary, always.

As we said, we at Moisand Fitzgerald Tamayo, LLC have been operating exclusively as fee-only fiduciaries, legally obligated to place our clients’ interest first for well over a decade. We only work in a fee-only fiduciary capacity and never “switch hats” to become sales people. We have no mechanism in place to receive compensation from anyone other than our clients directly.  “We work for you” isn’t a slogan, it is a legal fact.

We have no mechanism in place to receive compensation from anyone other than our clients directly.  “We work for you” isn’t a slogan, it is a legal fact.

Further, to make crystal clear our undivided loyalty to our clients and to make it easy for our clients to maintain their confidence that we are advising them solely in their best interests, we are pleased to announce we have become one of the very first firms in the country to subscribe to the Institute for the Fiduciary Standard’s Best Practices affirmation program. These practices are a public, written declaration of our undivided loyalty and how we demonstrate such loyalty.

So how do we show our undivided loyalty to our clients?  We make commitments others will not and put those commitments in writing for all to see.

Per the Institute for the Fiduciary Standard, “There is a gap in federal regulatory compliance and advisor group codes of conduct. This gap has left too many investors receiving questionable product recommendations under the guise of fiduciary advice.”

We agree.

The complete list and explanation of the 12 practices can be found below but the first practice sets the stage for the rest:

“1. Affirm the fiduciary standard under the Advisers Act of 1940, common law and, if applicable,

ERISA and DOL’s COI Rule, govern all professional advisory client relationships at all times.”

The word “all” is a key difference between how we serve our clients and how most of the financial industry conducts their business.We are paid only by you to serve only you and never “switch hats” to sell you something or be accountable to a lower standard.

The word “all” is a key difference between how we serve our clients and how most of the financial industry conducts their business. We are paid only by you to serve only you and never “switch hats” to sell you something or be accountable to a lower standard.

 

Best Practices: A Professional Code of Conduct


Best Practices are professional conduct standards that outline what the Board believes fiduciary
advisors should do for clients. Here, each Best Practice is listed and described in italics below it. The
practices seek to uphold a high standard of transparent and objective advice. A firm subscribing to Best
Practices affirms with these actions, to:

1.Affirm the fiduciary standard under the Advisers Act of 1940, common law and, if applicable,
ERISA and DOL’s COI Rule, govern all professional advisory client relationships at all times.
Fiduciary status, as required in law, applies at all times in all client engagements and this affirmation
is stated in writing.

2. Establish and document a “reasonable basis” for advice in the best interest of the client.
Advice is given on a “reasonable basis” and a summary of this “reasonable basis” will be provided by
your advisor in writing upon request.

3. Communicate clearly and truthfully, both orally and in writing. Do not mislead. Make all
disclosures and important agreements in writing.
All important client agreements and disclosures are put in writing and that no written or verbal
statements are misleading.

4. Provide a written statement of total fees and underlying investment expenses paid by the client.
Include any payments to the advisor or the firm or related parties from any third party resulting from the advisor’s recommendations.
Your advisor provides a good faith estimate of fees and expenses in writing during the starting phase
of the engagement when the investment policy is agreed to. Thereafter, your advisor will offer to all
clients and will provide, upon request, an annual good faith estimate in writing of total fees and
expenses incurred by each client and paid to the firm or related parties because of my advice.

5. Avoid conflicts and potential conflicts. Disclose all unavoidable conflicts. Manage or mitigate material conflicts. Acknowledge that material conflicts of interest are incompatible with objective advice.
Your advisor seeks to avoid conflicts of interest. For unavoidable conflicts, your advisor 1) affirmatively
discloses the conflict in writing with ‘sufficiently specific facts’ to allow client understanding, and 2) manages
the conflict to preserve the client’s best interests. For material conflicts your advisor 3) obtains informed
written client consent. Also, 4) your advisor affirms the transaction remains consistent with the client’s best
interests. Further, he or she provides clients and prospective clients a written description of conflicts and steps
to manage them.

6. Abstain from principal trading unless a client initiates an order to purchase the security on an
unsolicited basis.
Your advisor abstains from principal trading – unless specifically requested by a client without your
advisor’s urgings.

7. Only accept compensation in the form of fees paid directly by clients. Avoid compensation in
association with client transactions.
All payments to the firm or advisor associated with product sales are disallowed.

8. Avoid gifts or entertainment that are not minimal and not occasional. Avoid third party payments, “benefits” and indirect payments that do not generally benefit the firm’s clients and may reasonably be perceived to impair objectivity.
Gifts and entertainment received are minimal and occasional. Any third party compensation or
benefits received by the firm generally benefit the firm’s clients and do not impair your advisor’s objectivity. The
firm’s complete policy on gifts and entertainment and “soft dollars” is available on request.

9. Ensure baseline knowledge, competence and ongoing education appropriate for the engagement.
Your advisor’s education, professional certifications and ongoing education are appropriate for client
engagements, and, at minimum, include an undergraduate degree and either a relevant post graduate
education or a specialized designation or certification requiring significant additional education.

10. Institute an investment policy statement (IPS) or an investment policy process (IPP) that is
appropriate to the engagement and describes the investment strategy. Have access to a representative universe of investment vehicles that provide ample options to meet the desired asset allocation in consideration of generally accepted criteria.
The IPS or IPP may be of varying lengths, but it should express, at minimum, assumptions regarding
objectives, risk and performance. Follow and document a prudent process of due diligence to
research and analyze investment vehicles. On request, document the prudent process applicable to any
recommendation and the investment program is implemented consistent with the IPS or IPP

11. Consider peer group rankings or apply specific procedures in ensuring underlying investment
expenses are reasonable.
Your advisor benchmarks the fees and costs clients incur with reliable services or surveys other
resources and / or has procedures to determine that client expenses are reasonable.

12. The advisor affirms in writing adherence to Best Practices, and attains written affirmation from the firm that these business practices may be met by the advisor.
Your advisor affirms adherence to Best Practices and no firm policy interferes with this adherence.

 

 


 

 Contact Us


Moisand Fitzgerald Tamayo, LLC is an Orlando, FL and Melbourne, FL based fee-only financial planner serving central Florida and clients across the country. Moisand Fitzgerald Tamayo, LLC specializes in providing objective financial planning, retirement planning, and investment management to help clients build, manage, grow, and protect their assets through all phases of one’s life and the many transitions in between.

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Important Additional Information & Disclosures


Please remember that past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Moisand Fitzgerald Tamayo, LLC-“MFT”), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. 

Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions.  Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from MFT. 

Please remember that if you are a MFT client, it remains your responsibility to advise MFT, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. MFT is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. Tax advice is given only to clients and only when agreed to by MFT. A copy of the MFT’s current written disclosure Brochure discussing our advisory services and fees is available for review upon request.

Please Note: MFT does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to MFT’s web site or blog or incorporated herein, and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.

Please Note: Limitations:  While MFT does NOT pay for recognition, awards, or publicity, neither rankings and/or recognition by unaffiliated rating services, publications, or other organizations, nor the achievement of any designation or certification, should be construed by a client or prospective client as a guarantee that he/she will experience a certain level of results if MFT is engaged, or continues to be engaged, to provide investment advisory services. Rankings published by magazines, and others, generally base their selections exclusively on information prepared and/or submitted by the recognized adviser. Rankings are generally limited to participating advisers. No ranking or recognition should be construed as a current or past endorsement of MFT by any of its clients.  ANY QUESTIONS: MFT’s Chief Compliance Officer remains available to address any questions regarding rankings and/or recognitions, including providing the criteria used for any reflected ranking.

Historical performance results for investment indices, benchmarks, and/or categories have been provided for general informational/comparison purposes only, and generally do not reflect the deduction of transaction and/or custodial charges, the deduction of an investment management fee, nor the impact of taxes, the incurrence of which would have the effect of decreasing historical performance results.  It should not be assumed that your MFT account holdings correspond directly to any comparative indices or categories. Please Also Note: (1) performance results do not reflect the impact of taxes; (2) comparative benchmarks/indices may be more or less volatile than your MFT accounts; and, (3) a description of each comparative benchmark/index is available upon request.

 

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