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Legions of Certified Financial Professionals (CFPs) face a choice: either act as a fiduciary, as their CFP certification will require as of October 1, or surrender their credentials in order to work for firms that push products upon their customers that meet the weak “suitability” standard.

To put the significance of this decision in context, consider what a planning client recently asked me: “My current financial consultant told me he is a fiduciary. And that he acts in my ‘best interest.’ Can I trust him? Is he doing a good job for me?”

As I reviewed this new retiree’s investment portfolio, several things became clear. The financial consultant was, in fact, a “fiduciary” to the client – but only for a small portion of the client’s portfolio. Fully 80% of the portfolio was managed under the low standard of “suitability” – which permitted the financial consultant to sell highly expensive variable annuities and costly mutual funds to the client. In fact, the client was paying total fees and costs in excess of 2% a year – more than double what she should be paying for a $2 million portfolio. In fact, some of the investment products had annual fees in excess of 3.5% a year.

The portfolio had no structure designed to minimize taxes. The client was paying far too much in taxes relating to her investments.

An investment policy was absent, despite the need to ensure a disciplined approach to risk management. Following years of sustained advances in the valuations of the equities market it was readily apparent that the client was assuming too much risk.

The retiree’s financial consultant and his firm were receiving a huge amount of compensation – via various hidden fees. These included “payment for shelf space” arrangements in which the brokerage firm was incentivized by variable annuity and mutual fund companies to sell higher-cost investments. And, in the world of investments, the academic research is clear – the higher the costs, the lower the long-term returns for the individual investor. Simply put, fees and costs matter.

In essence, it was evident from the advice rendered that the financial consultant had little to no education and experience in the design and management of investment portfolios, nor in undertaking the appropriate due diligence on investment strategies and products.

Sadly, this client’s situation is not an isolated incident. The client placed her trust in this financial consultant. The financial consultant in fact stated that he acted in her “best interests.” And the client’s trust was betrayed – via conflicts of interest that were neither avoided nor properly managed to keep the client’s interests paramount to those of the financial advisor.