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  • Steve Coker, CFP

Is Cedarstone a Fiduciary?

I was asked this week whether Cedarstone is a Fiduciary. The answer is yes, of course. From its origins Cedarstone has been held to the Fiduciary standard, which requires Cedarstone to always act in the best interest of its clients. You would think that such a standard would be universal, but it is not. Not all financial advisors are fiduciaries and in fact, most are not.

We have written the past about the Department of Labor’s fiduciary rule for investment professionals. While the rule was originally scheduled to be implemented in 2018, it was tabled indefinitely due to a successful lawsuit led by several industry groups. In summary, the proposed rule imposed a fiduciary standard upon all investment professionals, requiring them to always act in the best interest of the client. Currently, most licensees are held to a lower standard of care called the ‘suitability standard’. In effect, most brokers and insurance professionals can sell clients any investment as long as it is ‘suitable’, even if it is not in the client’s best interest to make the investment.

If you are a bit stunned that a rule requiring investment professionals to act in the best interest of their clients would be controversial, so are we. In our view, the rule was a step in the right direction for the financial industry, which too often deserves its reputation for being self-serving and untrustworthy.

As a fee-only, independent, Registered Investment Advisor, our licensing at Cedarstone Advisors already holds us to a fiduciary standard of care. Quite simply, we are required to, and do, always act in the best interest of our clients. It seems rather basic to know that the advice you receive is unbiased, but unfortunately, it is not always the case. Too often, commissions or pressure from within large banks and brokerage houses, push brokers and advisors to push ‘higher fee’ investment options. By remaining independent, and fee-only, we at Cedarstone Advisors avoid these common pitfalls.

We are hopeful that better regulation of the industry is still possible. There are already new proposed rules from the SEC that would implement much of what the Department of Labor had proposed. Several professional associations, such as the CFP board, and the CFA institute, are actually lobbying to put better regulations in place. Until those new rules come to pass, know that we at Cedarstone are already providing you with independent advice that is in your best interest. If you would like better advice, please give us a call.

#fiduciarystandard #investmentadivosr #fiduciaryrule

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