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Are Consumers Losing Ethical Ground?

By Rick Kahler MS CFP™ http://www.KahlerFinancial.com

Suppose one of my clients has his heart set on using half of his retirement account to buy each of his grandchildren a new car.

Or, a physician-client in a panic over falling markets wants to sell all her stocks and buy gold. What is my responsibility as their financial planner? How far should planners go to try to keep clients from making serious financial mistakes?

Just as with the patient engagement, it’s important for planners to respect clients’ competence and ability to make their own life decisions. Client-centered planners also need to remember that the goal is to help clients get what they want, not what the planner might want or think the client should want.

On the other hand, should a planner stand idly by and watch someone walk off what the planner perceives as the edge of a financial cliff?

Potential Answers?

Part of the answer to this dilemma stems from a planner’s legal obligation. Most advisors who sell financial products have no fiduciary duty and are not legally required to put their customers’ interests first. Fiduciary advisors, which include those who are fee-only, do have a legal obligation to act in their clients’ best interests.

Fiduciary Responsibility

Doctors, clergymen and attorneys are fiduciaries. But, what is the legal responsibility of a fiduciary financial planner who believes clients are about to do themselves financial harm?

Example:

Let’s say I have a client who is about to do something that may be viewed by a court of law as “extreme” or “imprudent.” (An example would be putting all his money into one asset class like gold, cash, penny stocks, etc.) At the minimum, I would need to protect myself by carefully fulfilling my legal responsibilities. This would include making certain I emphasized to the client that, given the research and data available, his actions could hurt him financially. I also would want to be sure the client fully understood and took responsibility for his actions.

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In terms of the broader aspect of what financial planners owe to their clients, meeting this legal obligation is not enough. In my view, fiduciary planners’ obligation to put clients’ interests first includes an ethical responsibility to do no harm. Sometimes this ethical and legal responsibility requires planners to give clients information they may not want to hear.

As we focus on the clients’ goals and help them carry out their wishes, part of our role is to make sure they have all the information they need. This gives us a responsibility to educate ourselves so the advice we offer is as sound as we can make it. We also need to do whatever we can to help clients hear and understand that advice.

Clients who are hovering on the edge of a financial cliff are typically about to act out of strong emotions such as fear. They often can’t take in financial advice until they are able to move through that fear. It only makes things worse if financial advisors shame clients, bully them, or abandon them to their fears. The challenge for planners is to help clients reach a more rational place so they can gather additional information and make decisions that will serve them well.

Industry Update is Not Good – Give Up the ‘Fiduciary’ Fight

According to industry pundit Bob Veres, so-called Financial Advisors need to face a hard truth – Independent Registered Investment Advisors [RIAs] have lost this round.

But, we already told you so on this ME-P.

Fortunately, there are other better ways to set yourself in the medical ecosystem.

The Certified Medical Planner™ Designation

A Certified Medical Planner™ is a fiduciary at all times.

• http://www.CertifiedMedicalPlanner.org
• Enter the CMPs

More:

• Fiduciary Financial Advisor versus Non-Fiduciary FAs
• An Interview with Bennett Aikin AIF®
• Calling for CFP® Fiduciary Status, Real Education and Higher Duty
• Physician-Investors and the “F” Word
• The Uniform Prudent Investor Act versus Fiduciary Accountability

Assessment

With the right kind of support, clients are almost always able to get past the fear that is pushing them to make imprudent decisions. Providing such support by working with clients’ emotions and beliefs about money, perhaps with the help of a financial therapist or financial coach, is well within a financial planner’s ethical responsibility. Our role is not merely to do no harm. It is also to use all the tools we have to help clients act in their own best interests.

Conclusion

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Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com

OUR OTHER PRINT BOOKS AND RELATED INFORMATION SOURCES:

• PRACTICES: www.BusinessofMedicalPractice.com
• HOSPITALS: http://www.crcpress.com/product/isbn/9781466558731
• CLINICS: http://www.crcpress.com/product/isbn/9781439879900
• ADVISORS: www.CertifiedMedicalPlanner.org
• FINANCE: Financial Planning for Physicians and Advisors
• INSURANCE: Risk Management and Insurance Strategies for Physicians and Advisors
• Dictionary of Health Economics and Finance
• Dictionary of Health Information Technology and Security
• Dictionary of Health Insurance and Managed Care

Comprehensive Financial Planning Strategies for Doctors and Advisors: Best Practices from Leading Consultants and Certified Medical Planners™

Filed under: CMP Program, Ethics, Financial Planning | Tagged: Accredited Investment Fiduciary, certified medical planner, CMP™ Course, fiduciary accountability, fiduciary advisor, financial planners, Rick Kahler CFP®, www.CertifiedMedicalPlanner.org | Leave a comment »