All Things Financial Planning Blog

I can see it now, Charlton Heston standing on the mountain top, winds swirling and lightning flashing as he holds aloft two stone tablets. Inscribed on these tablets as we all know are the Ten Commandments. These rules were set forth as a guide for the people of Israel to follow. Heston delivered a masterful portrayal of Moses in this epic film directed by Cecil B. Demille.

While I surely do not measure up to the standards of Heston or DeMille (let’s not even get into Moses) allow me to take a stab at some financial commandments. Think of these as rules for financial advisors to live by. Introducing The Five Commandments. 

Thou shalt put your client’s best interest first.
When we all were much younger, we learned the Golden Rule. Do unto others as you would have them do unto you. This lies at the heart of the most important aspect of a client/advisor relationship. The advisor should at all times operate with your best interest in mind. 

Thou shalt act with due care and utmost good faith.
When you engage a financial professional you should have certain reasonable expectations. One of those is that the advisor will act with due care and in utmost good faith. So what am I talking about here? Your advisor should use a sound method or follow a prudent process to come up with the recommendations that are made regarding your particular situation. A professional owes you the benefit of sound judgment. 

Thou shalt not mislead clients.
You deserve to be dealt with fairly and in an upfront fashion. Perhaps you would assume that you would not be misled, but events in the era of Madoff suggest otherwise. 

Thou shalt provide full and fair disclosure of all material facts.
Full and fair disclosure of all material facts is paramount to having an engagement that works for your benefit. Everything needs to be put on the table at the beginning. Make sure that you know how your advisor is being compensated. Understand the terms of the engagement and what services you should expect to receive.

Thou shalt disclose and fairly manage all material conflicts of interest.
Sometimes conflicts of interest may arise. When that happens you need to be told about it in plain English. Not only should you be told about the conflict but it should be handled or managed properly. Whatever conflicts that arise should result in an outcome that is fair to you. Of particular note is the fact that how your advisor gets paid does not necessarily eliminate potential conflicts of interest.

Maybe it would be asking a little too much to have your advisor chisel the above into stone tablets. But wouldn’t you feel a little better about if he or she at least put it in ink?

Note: The preceding “commandments” are derived from the Financial Planning Association Standard of Care.

Lee Baker, CFP®
President
Apex Financial Services
Tucker, GA