Chris Haviaris, CPA, CFP developed her unique perspective and uncanny unability to blend the practical and the profound over 25 years of working with people and their money, and nearly that long practicing and studying yoga. She is the founder of TTR Wealth Partners, LLC, and lives in the Hudson Valley with her two children and their very zen cat, Maddie.

The Meaning of Fiduciary Financial Planning - Part 1

The Meaning of Fiduciary Financial Planning - Part 1

The recent DOL fiduciary rule has created quite a buzz.  The upside of that has been an increase in public awareness around the idea of a fiduciary standard, resulting in more people appreciating the importance of it in all professional relationships. The downside is the noise and confusion that often results as a new buzzword gets pounced on by the media and co-opted by the marketing machine.

It becomes difficult to discern where words actually represent the underlying reality, and where they are simply tools, chosen for impact rather than substance.  

In this two-part post, we'll unpack the words, look deeply at their meaning, and practice our discernment.  Let's start with the word fiduciary.  

The DOL rule defines the fiduciary standard for advisers quite simply as "putting their clients best interest before their own profits". As regulations do, it then goes to great lengths to muddy the waters, attempting to clarify who is a fiduciary, when, which situations are covered, and which are exempt. Well-intentioned as it may be, all of this belies the true meaning of the word fiduciary, which Webster's defines as "of, relating to, or involving a confidence or trust". It derives from the same Latin root as fidelity - fidelis, meaning faithful.

Looking at another area where fidelity is expected, a marriage or committed relationship, the idea that your partner need only be faithful to you in certain situations seems ridiculous. Faithfulness is a part of the relationship, not of specific transactions that occur within it.  And you expect your partner to be faithful, not to act faithful.  Which is why I take issue with the phrase act as a fiduciary.  You either are one, or you're not.  Being a fiduciary refers more to the mindset from which behavior flows, then to the behavior itself.

Often, our first introduction to this mindset comes from our parents and community in the form of the Golden Rule. "Do the right thing" is ingrained in most of us from an early age. The trick is keeping that internal voice alive and strong, even when the pressures of real-life make it inconvenient or costly.

My further indoctrination in the fiduciary mindset came during my study for the CPA exam. Our code of ethics calls for us to avoid "even the appearance of impropriety".  I fell in love with that phrase immediately.  It validated what I knew in my heart to be true, that relationships of trust are built upon a felt sense of the other as inherently trustworthy.

When doubt enters the picture, that feeling of trust is compromised, and so all situations that might give rise to doubt are to be avoided.  Pretty simple really.  And makes me wonder if, had the financial advice industry been rooted in that same premise from its earliest days, we might not need to quibble now about rules and exemptions.

I more than honor the fiduciary obligation imposed on me by the legal form under which I have chosen to do business, I embrace my role as a fiduciary in all interactions with clients and the public. For me, it's an internal standard, not an external one.

If you'd like to know when part two of this post, which will look deeply at real financial planning, is up, enter your email address for updates.  

In the meantime, do the right thing.  By which I mean let me know what you're thinking here or on social media!

Faithfully yours,
Chris

 

When I Was Invisible

When I Was Invisible

Money Equals Freedom.  Right?

Money Equals Freedom. Right?

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