Fiduciary Duty – Why is it Important for Medical Professionals?

oathAs a medical professional, your patients expect you to have a certain level of expertise. They come to you for advice and help, trusting that you will offer them the best possible solutions for their situation. In much the same way, individuals who work with a financial planner trust that the advice they are receiving is also in their best interest. In many cases this is true (especially if you are working with a fee-only advisor), however, in some instances, financial planners are only looking after their bottom line, with no regard for the client – they do not abide by the rules of fiduciary duty.

Fiduciary duty is defined as the responsibility to act in the best interest of another person or party. For example, in the case of a publicly held business, the board of directors has a fiduciary duty to act in the best interest of all parties that are impacted by the organization’s business dealings. In general, this responsibility exists any time a business relationship requires the client to have a particular level of confidence in and reliance on the decisions made on their behalf. In essence, the client trusts that the fiduciary / advisor / board member will act in their best interest and will make decisions that have the greatest chance of leading to a positive outcome.

As fee-only financial advisors, we take this duty very seriously when working with our clients. This is because fee-only advisors do not sell products – they make recommendations to their clients. They do not receive commissions; they only receive payment for the services they provide. By comparison, a fee-based advisor or financial planner typically receives a kickback or commission for selling the customer certain products. And, like all commission based sales, some products are more lucrative than others.

Fee-based advisors have hidden costs attached to their recommendations. The bottom line is – they need to make money. One of the easiest ways to do this is to lead the investor to believe they have purchased a stock or financial product at the best price available. The consumer is unaware that in addition to the actual cost of the product being sold, a profit for the firm is built into the sale price.

So what can you do to avoid this scenario? If you choose to work with a fee-based financial advisor, do your homework and ask questions such as, “what fees are included,” “where did you get this information” and “what is the long term plan for my financial future.” If they don’t give you answers that make you comfortable, give us a call and ask us those same questions…we are pretty sure you will like the answers you receive.

About Objectively Speaking

Tom Batterman, founder of Vigil Trust & Financial Advocacy and Financial Fiduciaries, LLC is in the business of representing the best financial interests of his clients. Having provided objective, fee-only financial management services for over two decades, he specializes in managing the investment and related financial affairs of individuals and mutual insurance companies who do not have the time, interest or expertise to manage such matters on their own. As an objective, unbiased professional who takes on a fiduciary responsibility to his clients, he guides clients to the financial decisions they would make themselves if they had years of training and experience and the time and expertise to fully research and understand all of their options. Founded in 2010 as an outgrowth of Vigil Trust & Financial Advocacy, Financial Fiduciaries, LLC is a financial management solution for individuals and mutual insurance companies who recognize they do not have the time, interest or expertise to properly attend to their financial matters on their own. While there are many financial “advisors”, most of them have investment products to sell and the “advice” they provide is geared toward getting their clients to engage in a purchase. As one of the rare subset of advisors known as “fiduciary advisors”, Financial Fiduciaries does not sell any investment product so its guidance is not compromised by conflicts of interest which plague ordinary advisors. Prior to his employment in the financial industry in financial advocacy and trust positions, he worked at a private law practice in the Wausau area in the areas of estate planning, tax, retirement planning, corporate organizations and real estate. He is a graduate of the University of Wisconsin-Madison and the UW-Madison Law School and has during his career held Series 7, 24 and 65 securities licenses. A longtime resident of the Wausau, Wisconsin Area, Tom is active in the community. He enjoys golf, curling, skiing, fishing, traveling and spending time with his family.
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