How Is Your Financial Advisor Paid?

I have chosen to work as a Fee-Only FInancial Planner because I feel it is the most objective way to give financial advice. I have taken the Fiduciary Oath. Evergreen Financial Planning provides financial and tax advice on an hourly-as-needed based.

Commissioned Professionals: If you aren't sure how your Financial Advisor is getting paid, chances are thy are earning commissions. Your broker or insurance professional earns a commission whenever they sell you a stock, mutual fund, annuity or one of the many products that trigger a sales charge. Sounds like a conflict of interest to me!

Fee-Based Advisors: Fee-based professionals also receive monetary reward for the products they sell. With fee-based accounts, brokers can charge customers a flat fee or a percentage of the value of the account. Sounds like a conflict of interest to me!

Fee-Only Advisors: A Fee-Only Financial Planner does not sell securities or insurance. There is not the conflict of interest which exists with the other types of "advisors" because recommendations for investments are not made based on the size of the commission. The fee-only advisor works for you.

AUM: Some advisors charge a fee for Assets Under Management. They are compensated by charging a percentage of the market value of the assets they manage on behalf of their clients

What is a Fiduciary?

The five core principles of the authentic fiduciary standard say it well. They are:

• Put the client's best interest first;
• Act with prudence; that is, with the skill, care, diligence and good judgment of a professional;
• Do not mislead clients; provide conspicuous, full and fair disclosure of all important facts;
• Avoid conflicts of interest; and
• Fully disclose and fairly manage, in the client's favor, unavoidable conflicts.

Five Core Fiduciary Principles Interest SEC Commissioners

Details of core fiduciary principles and differences

between fiduciary and ‘arm’s length’ standards discussed

Washington, DC – August 3, 2009 – The Committee for the Fiduciary Standard,

a group of investment industry leaders, took their fiduciary message to Washington on

July 29th. The Committee met with SEC Commissioners, a Treasury official and

Congressional staff.

“We felt strong interest from everyone we met. Although no specific

commitments were made, our takeaway was that all participants understand and believe

in the application of the five core fiduciary principles to any and all who provide (or

purport to provide) investment advice,” says Harold Evensky, a member of the

Committee and president of Evensky & Katz, a registered investment adviser.

The Committee met with SEC Commissioners Elisse B. Walter and Luis A.

Aguilar. During the course of their discussions, the Committee addressed how the five

core principles would apply in various circumstances where advice is given to an

investor. The Committee also pointed out sharp differences between the fiduciary and

arm’s length standards. In addition, the Committee briefed an official from the Treasury

Department and Congressional staff.

“We saw Washington at its very best. The keen sense of the vital role of the

fiduciary standard, and the historic opportunity to ‘do what’s right for investors’ were

palpable in our meetings,” says Knut A. Rostad, Chair of the Committee and the

Regulatory and Compliance Officer at Rembert Pendleton Jackson, a registered

investment adviser.

The five core principles of the fiduciary standard are:

• Put the client’s best interests first;

• Act with prudence; that is, with the skill, care, diligence and good

judgment of a professional;

• Do not mislead clients; provide conspicuous, full and fair disclosure of

all important facts;

• Avoid conflicts of interest; and

• Fully disclose and fairly manage, in the client’s favor, unavoidable

conflicts.

The Committee announced its formation in June for the purpose of working to

ensure that any new legislation or rulemaking “meets the authentic fiduciary standard,

as presently established in law.” The Committee has:

• Called on Congress to adopt the authentic fiduciary standard in Wall Street

reforms and asked that Congress ensure that investors’ best interests are made the

number-one priority in new legislation

• Introduced the five core principles of the authentic fiduciary standard

• Urged investors, professionals and all interested market participants to ‘vote’ in

support of the five core fiduciary principles by signing the Committee’s online

petition

• Been invited by staff members of the House of Representatives Committee on

Education and Labor to provide assistance on HR 2989, a Bill intended to

introduce fiduciary and fee disclosure requirements for those who give advice to

retirement plan participants.

The Committee’s members are recognized leaders in the investment and financial

advisor profession:

• Blaine Aikin, fi360

• Clark M. Blackman II, Alpha Wealth Strategies, LLC

• Gene Diederich, Moneta Group

• Harold Evensky, Evensky & Katz

• Sheryl Garrett, Garrett Planning Network

• Roger C. Gibson, Gibson Capital, LLC

• Matthew D. Hutcheson, Independent Pension Fiduciary

• Gregory W. Kasten, Unified Trust Company

• Kate McBride, Wealth Manager

• Fred Reish, Reish, Luftman, Reicher & Cohen

• Ronald W. Roge, R. W. Roge & Company

• Knut A. Rostad, Rembert Pendleton Jackson