Fi·du·ci·ar·y

Fi·du·ci·ar·y
The New Standard in Financial Planning
You may have heard the term fiduciary (Feh-doo-shee-air-ee) thrown around in the financial news lately. It sounds like a jargony term but is one of the most important factors you'll consider when choosing a retirement planner. 

The layman's definition is simple,a Fiduciary, by law, is required to act in your best interests. 

If you're scratching your head thinking, "Haven't financial professionals always had to act in the client's best interest?" the answer is no.  

There are two legal standards in financial advising: 
  • Suitability Standard
  • Fiduciary Standard
The Suitability Standard states that a recommendation needs to be suitable. Now, this might seem like that means your best interest... It doesn't. For example,  your broker determines that it makes sense for you to invest in a CD. CD at Bank A offers 4% per year and pays the broker a little, CD at Bank B offers 3% per year but pays the broker a lot. The suitability standard states the broker can offer either CD even though CD at Bank A is the better option.

The Fiduciary Standard is a common sense standard. Its the same standard doctors and lawyers are held to, to do what is in your best interest. In the example above, a Fiduciary Advisor is required by law to recommend the CD at Bank A. 


As much as 92% of the current investment advice given by financial advisors is found to be non-fiduciary
THE MARKET FOR FINANCIAL ADVICE: AN AUDIT STUDY | NBER
 The Fiduciary Standard was set to be a regulatory standard in 2017. However, companies that make their bottom line off of the suitability standard won out and the Fiduciary Rule was voted down in court in the summer of 2018. This means that advisors are not required to act in your best interest. 

Every retiree will have a choice to make when choosing an advisor to help them reach their goals.  Either choice will have a tremendous impact down the road. Below, we lay out, not only our adherence to the Fiduciary Standard, but also add our own code of ethics. 
The Safeguard Standard 
Too often, advisors and brokers pay lip service to integrity and ethics. Regulatory standards don't provide the protection that retirees need. Safeguard advisors are held to a higher standard. A standard with real world consequences. Below is a summary of the codes of ethics we hold all Safeguard Advisors and employees to. 

Safeguard Wealth Management Code of Ethics

Safeguard Wealth Management also requires owners and employees to annually sign an internal Code of Ethics which:
  • Expressly Prohibits disclosing confidential client information to anyone other than pre-authorized individuals.
  • Expressly Prohibits accepting gifts or gratuities from those wishing to do business with SWM
  • Expressly prohibits recommending securities in which the Advisor has a material economic interest.
  • Expressly Prohibits Front-Running Clients
  • Expressly Prohibits trading securities which clients own without Pre-Clearance
  • Requires personnel to submit quarterly holding and transaction reports for review of potential conflicts of interest
Penalties for violating SWM’s internal Code of Ethics range from fines to termination to civil and even criminal referrals.

Third Party Code of Ethics

The American College has been the gold standard for financial advice knowledge and best practices for over a century.

To hold a designation from The American College, designees must not only complete coursework and continueing education but also agree to a Code of Ethics, which include items like:

I. Conduct yourself at all times with honor and dignity.
II. Avoid practices that would bring dishonor upon your profession or The American College.
III. Publicize your achievements in ways that enhance the integrity of your profession.
IV. Continue your studies throughout your working life so as to maintain a high level of professional experience.

The American College also goes above-and-beyond the typical commitment to honor and requires designees to agree to the following pledge:

"In all my professional relationships, I pledge myself to the following rule of ethical conduct: I shall, in light of all conditions surrounding those I serve, which I shall make every conscientious effort to ascertain and understand, render that service which, in the same circumstances, I would apply to myself."

Designees found to be in violation of the Code of Ethics or the Pledge are stripped of their designations.
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