The reality is that in our daily lives we probably don’t need to know the meaning of words like bibliopole (a person who buys and sells often rare books), lactarium (another word for ‘dairy’) or umbriferous (meaning ‘shady’) however there is one word which you should care about, especially if you’re approaching retirement and find yourself engaging with a financial planner to help you make some of the most important decisions during this vital time. It’s a word which is more widely used in the USA than in the UK but it’s worth knowing…

This word is ‘Fiduciary’

The meaning of the word is simple. It’s an individual who acts with the highest duty of care on behalf of their client. It also means that the best interests of the client supersede the interests of any adviser or firm they work for.

Now the reality is that in an ideal world every professional should be a fiduciary and have fiduciary duties. The reality is a little more murky and in the interests of helping you make the right decisions I’m going to explain the situation (as I see it) in the UK…

There has been massive improvements in the UK when it comes to getting financial advice over the past few years. However there is still a Brobdingnagian (yes that is a word!) room for improvement.

The simple reality is that when recruiting a financial planner or a financial adviser you want someone you can trust and who puts your interests first.

There a number of ways you can ensure that a financial planner is putting your interests first.

The first thing you need to do is ensure you’re financial planner is independent of the products they recommend especially if they make their living by selling these products. You will not get a financial planner who puts your interests first but also needs to earn their living by selling their ‘products’ as these two motivations aren’t always aligned and often can be in conflict. When we start to engage with clients they are often in a position where the best advice is to retain much of what they’ve got. However the reality is that if your adviser are in any way rewarded, be it in cash or non cash incentives, to sell ‘product’ then human nature tells us that their motivations may not be alligned with whats best for you.

The way to avoid this particular conflict is to select an adviser who agrees costs for the advice they provide not for the product they recommend. These costs are likely to be both upfront and on an ongoing basis but should always be clear, fully disclosed to you and not related to committed to making a specific change to a particular financial product especially if the adviser is linked to the company which provides the product. You may agree that these costs are paid through product but it’s important you are crystal clear on what these costs are and how they are taken.

Whilst there are still thousands of advisers linked to advising on a really limited range of ‘products’ the arc of time is leaning towards more advice being provided by advisers who are fiduciary. Advisers who simply acting for you in your best interests because you pay them fairly for their professional advice. In the meantime I’d recommend you avoid the advisers who can’t make you promise…

I’m going to be talking a lot more about what makes a fiduciary adviser over the course of the next few weeks however if you’d like to work with a firm who takes it’s responsibilities to it’s clients massively seriously please don’t hesitate to contact us on 01708 606 202 or you can email us at cassiedaems@cervellofp.co.uk, you see…

Even for amateur bibliophiles we’re really good people!