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BUSINESS
FIDUCIARY DUTY
and What It Means for You
By Stephanie Dick
A common denominator certainly seems to exist between profes- they are advising their
sionals in the medical, legal, accounting and financial planning in- client to consider. While
dustries. There appears to be a genuine attempt to preserve and it may not take a fiduci-
enhance trust and transparency and eliminate conflicts of interest ary standard to be im-
between practitioners and the public they serve. For example, physi- posed before a
cians recite The Hippocratic Oath prior to practicing medicine and professional is willing to
are held to certain ethical and professional standards of conduct. At- share material factors
torneys, Certified Public Accountants (CPA) and Certified Financial such as compensation
Planners (CFP) practitioners take an oath and are bound by pre- with a client, the impo-
scribed ethical and professional standards of conduct. sition of a fiduciary duty
does help to reinforce what should and needs to be shared with a
It is commendable that these professional disciplines and perhaps client so that they can make a fully informed decision.
others not mentioned here continually strive to raise the bar in the
areas of integrity, fairness and objectivity. In the case of the financial Explaining Benefits
planning industry, many commit to similar professional standards but So how can a client potentially benefit by engaging a financial
to the consumer it is often less clear. The consumer is left to discern
and understand the subtle yet important differences among profession- planning professional held to a fiduciary standard? A quick example
als who market themselves as providing financial planning services. may help to shed some light on the potential benefits. Suppose Mr.
and Mrs. Smith, both in their 70s, have a $15 million net worth,
Understanding Differences have done very little estate planning, and are concerned that federal
“Financial planning” is a phrase ubiquitously marketed in the fi- estate taxes will erode some of the wealth that they hope to transfer
to their son and to charity.
nancial services industry today. A simple Internet search for “finan-
cial planning” returns a seeming limitless number of organizations, Most planning professionals would agree that there are numerous
professionals and articles centered on this topic. While presumably estate planning techniques and strategies that could be considered
serving similar purposes, these organizations and professionals hold- here to assist the Smith family with their goal of maximizing the
ing themselves out as providing financial planning services are ac- transfer of their wealth to the next generation and charity in a tax-
tually quite different in their objectives and the methods they use efficient manner. For illustration purposes, though, let us assume
to accomplish their goals. that a financial planning advisor who is not held to a fiduciary stan-
dard is only advising them to create and purchase a second-to-die
In 2007, the CFP Board’s Rules of Conduct were amended to re- life insurance policy owned by an insurance trust because the advisor
quire CFP practitioners to provide their financial planning services is compensated by insurance commissions. On the other hand, a fi-
as a “fiduciary.” Specifically, CFP professionals today are required nancial planning professional who is held to a fiduciary duty could
to act in the best interest of their financial planning clients and put certainly recommend a similar type of insurance trust strategy but
the client’s interests ahead of their own when providing financial the advisor would also be bound to share other relevant solutions
planning services. On the other hand, professionals who do not hold such as charitable gifting strategies which provide no monetary ben-
the CFP certification or another professional designation which re- efit to the advisor.
quires them to place their client’s interest before their own can still
market themselves as providing financial planning services. Stephanie Dick is vice president of commercial banking
for BB&T Wealth in San Antonio. She can be reached at
The potential and natural consequence here, of course, is that the 100 NE Loop 410, Suite 806, San Antonio, TX 78216;
financial planning professional who is not held to a fiduciary stan- 210-744-4396 or SDick@BBandT.com.
dard is likely not required to disclose all of the material factors, such
as compensation, which can help to shape the recommendations
30 San Antonio Medicine • February 2017
