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  • Writer's pictureBridget Sullivan Mermel CFP(R) CPA

The Fiduciary Standard: The Knighthood Oath for Financial Planners

Updated: Jul 15, 2023



`Welcome to another episode of Friends Talk Financial Planning! In this installment, we delve into the world of the Fiduciary Standard—a noble code of conduct that draws parallels to the chivalrous oaths of knighthood. Join us as we introduce our guest, Ken Robinson, who shares his insights on the significance of this standard and its impact on our clients.


From the very beginning, we dispel the misconception surrounding the term "fiduciary," reminding our viewers that it is not a dirty word but rather a distinction that financial professionals take pride in. Explore the essence of the fiduciary standard as we explore the depths of putting client interests ahead of all else, fostering a relationship built on trust and integrity.


Drawing inspiration from the days of yore, Ken takes us on a captivating journey back to the Middle Ages in Western Europe, where knights and their honorable oaths held great importance.


Reverent and generous, shield of the weak, obedient to my liege lord, foremost in battle, courteous at all times, champion of the right and good.


Discover how Ken, as a passionate advocate for the fiduciary standard, lives and breathes this oath in his role with clients. Gain insights into the responsibilities he undertakes, not as a rescuer but as a guiding force, ensuring his clients are in the best possible financial position.


As our discussion deepens, we explore the fundamental differences between agents of the past and the modern-day need for a fiduciary. Reflect on the subtle distinction of hiring someone to sort out your finances versus engaging an agent tied primarily to a company selling specific products. We shed light on the evolving landscape of financial services and the imperative of having our interests aligned with those of our clients.


At Friends Talk Financial Planning, we firmly believe that everyone deserves to have a dedicated ally in their corner. We take immense pride in our fiduciary commitment, prioritizing your best interests and striving to provide the guidance you deserve. Join us on this as we uncover the profound significance of the fiduciary standard—a true testament to integrity and client-centric financial planning.


Don't miss out on this empowering discussion! Subscribe to our channel to stay updated with the latest episodes and gain access to valuable insights into personal finance. Hit the notification bell to ensure you never miss a moment of Friends Talk Financial Planning.


Here's Ken's firm website: https://www.p-f-p.com


John's firm website: https://www.trinfin.com


For advisors around the US: https://www.acplanners.org/home


Thanks for watching and please subscribe!


TRANSCRIPT:


Bridget: Fiduciary. Isn't that a dirty word? It's something that we're all proud to be. In this episode of Friends Talk financial Planning, we're joined by our special guest, Ken Robinson, and he's going to talk about his special take on fiduciary. But we'll also talk about what's fee-only, what's fee-based, why you should care, and more. I'm Bridget Sullivan Mermel, and I've got a fee-only Financial Planning Practice in Chicago, Illinois.


John: And I'm John Scherer. I've got a fee-only financial planning practice in Middleton, Wisconsin. And before we start talking with Ken about fiduciary and the words that go with that, I want to remind everybody to hit that subscribe button. Subscribing helps other people find this content on YouTube. And we're coming to you today from the ACP Advanced Planners Conference in Tucson, Arizona. So really excited to have Ken Robinson, our friend and colleague, here to talk about fiduciary.


Bridget: And so, first of all, I want to talk about the definition of a fiduciary, which just means that you put your client’s interest ahead of your own. Would either of you improve on that definition?


Ken: Well, there are lots of different kinds of fiduciaries. For example, an executor of an estate is serving in a fiduciary capacity where their responsibility is to put someone else's interest ahead of their own. A trustee is similar as well. But in our profession, in this industry, fiduciary refers to a particular kind of financial planner that's doing that for their clients. And in ACP, we all serve in that role with our clients.


John: I just think this is what you get for asking a former lawyer😊 My answer is, yes, you got it right, Bridget!


Bridget: Okay, Ken has a special take, though, on fiduciary. Why don't you tell us your story about the oath?


Ken: Well, for years, I've been a member of a historical re-creation organization, and we recreate the Middle Ages in Western Europe. This has been my hobby, something that I've done for a lot of weekends since I was in college. And in this context, if you're recreating the Middle Ages, you have all sorts of different ranks. There are kings and queens, and we have different people in those roles every six months.


Bridget: You’re rotating those.


Ken: Yeah, we're rotating those. There are barons and baronesses and dukes and duchesses. And there's a rank called knighthood, which you can earn. And where I come from, the kingdom that my city, Cleveland, Ohio, happens to be a part of, when you become a knight, you take a particular oath. And included in that oath, which I took more than 20 years ago when I was recognized as a knight, are these words of what I am committing to be. And it includes reverent and generous, shield of the weak, obedient to my liege lord, foremost in battle, courteous at all times, champion of the right and the good.


And literally 50% of those relate directly to the fiduciary standard. The financial services industry is often really concerned about profit and not very concerned about clients. And the three of us, everybody else in ACP, and many other advisors besides think that's terrible. We think the client's interest should be first. And when people are confronted with these really confusing explanations of financial products without a clear description of what is going to be taken out of their profit, they're in a weaker position, so I do feel like I can be shield of the weak in performing my fiduciary standard.


Foremost in battle. There are some bad guys in financial services. There are some people who are not trying to be bad. They're just doing things that could be bad for our clients. In Cleveland, Ohio, and in the state of Ohio in general, we have local income taxes that can be very confusing. And just helping clients understand how not to overpay those. It's not that anybody's trying to defraud them, but they need a guide.


So in this hobby of mine, I took an oath that actually helps to remind me what my obligation is as a financial planning professional, as a fiduciary financial planner. And in fact, in my office, right above my computer is a picture that was taken when I was swearing this oath publicly for the first time to remind me of how important my clients are and that everything I do is focused on benefiting them.


Bridget: Interesting. So one of the things that I love about it is that it gets to the heart of putting clients first but in kind of an entertaining way.


Ken: Yeah, it certainly makes it easy for me to understand what my responsibility is. It's not about rescuing people. It's about helping them to be in the best position in whatever challenge they're facing. And that's, I think, exactly what we're called on to do as fiduciaries. The great majority of our industry may be focused on investments all the time, but if what I see is that the weaknesses in their auto insurance, then that's what I'm going to guide them on.


That's going to be the next thing on our list. We will get to investments eventually in its proper time, but can I make any money by having them strengthen their auto insurance? I'm not going to get paid for the policy. I don't want to be paid for the policy. I only want to make sure that they are getting the best unbiased advice and that's what the client pays me for.


John: It's really interesting to hear this. Of course, we all believe in this, but when you dissect it and start getting into it, additional things start to crystallize. And was it shield of the week?


Ken: Yes.


John: As you said, there are some bad guys out there in our world. In the olden days, not quite medieval times, but before this century, the financial services were represented by others, the companies needed agents, needed people to represent them, and so did the stockbrokers and the insurance agents. Because think about it. There was no Internet. You didn't go online and buy some things, so they needed people to represent those companies in delivering financial products to people. Today, what we do is we represent the clients to help select from these things. And it's a subtle difference, but it's a really meaningful difference.


And that's where there's some of these blurred lines for the consumer, because people who have historically represented the companies in a good and needed way now are not as needed. But yet it can be confusing for people to know who's representing the companies and who are the people representing the clients. And sometimes, I can get sort of jaded and think, “Oh, we're doing it right.” And I think we are. But it's just that times, as I look at it, have really changed with what's needed out there versus what's wanted.

And this idea of representing and being a shield takes on new meaning, because now we're talking about not the companies coming and having the agents or representatives sell those products, but rather it's the sophisticated mutual fund companies, insurance companies, who specialize in this business. And representing regular people who are good at being engineers or doctors or teachers or whatever they're really good at doing against the companies is what fiduciaries do. I love the analogy. It really puts a point on things.


Bridget: So it’s like we're on the same side of the table as the clients versus agents for companies who are on the same side of the table as the company they're representing. And so, it's upon them to be a good salesperson, and maybe be aligned with the clients’ interests, because that's ultimately going to help them the most, but we have a duty to do that, that's how we represent ourselves. So it's a subtle but, I think, crucial difference.


Ken: And the fiduciary standard in the modern financial services world, it's referred to as a fiduciary oath. And I think it's not that far removed from this concept of being champion of the right and the good, because all we're doing is we're looking after our clients the same way we'd want to look after the people who mean the most to us in the whole world: our family, our closest friends. We think everybody deserves someone who's in their corner that way. And that's why I'm proud to be a fiduciary and why I think it's a privilege to be a fiduciary. And I'm really glad that this is the part of the profession that I was able to build my business in.


Bridget: Yeah. So, Ken, if people want to find out more about you, our special guest today, how should they go about doing that?


Ken: My website is p-f-p.com. That's for practical financial planning. Headquarters in Rocky River, Ohio.


Bridget: Great. And I'm Bridget Sullivan Mermel. I've got a fee-only financial planning practice in Chicago.


John: And I'm John Scherer. I've got a fee-only financial planning practice in Middleton, Wisconsin. Ken, Bridget, and I are all members of the Alliance of Comprehensive Planners, or ACP. If you like what you hear on our show, check out acplaners.org. And don't forget, hit subscribe.




At Sullivan Mermel, Inc., we are fee-only financial planners located in Chicago, Illinois serving clients in Chicago and throughout the nation. We meet both in-person in our Chicago office and virtually through video conferencing and secure file transfer.

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