why do you need to focus on fiduciary ?

Why Do You Need ToFocus on Fiduciary?

Presented By: Kimberly J Howard

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What is Focus on Fiduciary?

• National consumer education initiative by the National Association of Personal Financial Advisors (NAPFA).

• Designed to educate consumers on the need for financial advisors to be held to a fiduciary standard.

• Annual campaign held every summer.

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What is a Fiduciary Standard?

A financial advisor held to a fiduciary standard occupies a position of special trust and confidence when working with a client. As a fiduciary, the financial advisor is required to act with undivided loyalty to the client. This includes disclosure of how the financial advisor is to be compensated and any corresponding conflicts of interest.

-The National Association of Personal Financial Advisors (NAPFA)

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Why is a Fiduciary Standard Important?

A fiduciary standard provides for:

– Trust– Confidence– Reliability– Client-Centered Approach– Prudent Advice and Guidance

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How Do You Select An Advisor?

• Interview several candidates – not just one!

• One size does not fit all – just because a friend is using an advisor does not mean that advisor is right for you.

• Ask the right questions.

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Interview Several Candidates

• By limiting the pool of candidates you are limiting your options.

• Different advisors have different abilities – match their abilities with your needs.

• Personality counts. If you are comfortable with your advisor you will feel better about your future.

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One Size Does Not Fit All

• People tend to do what friends and family do – this is a bad approach.

• Your situation is special and unique, so you need a special plan and course of action.

• Your comfort is a top priority. Be comfortable with the advisor with who you work!

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Ask The Right Questions

• By asking the right questions you will know if the prospective advisor will be in your corner.

• By asking the right questions you can determine if the advisor is held to a fiduciary standard.

• NAPFA recommends the following 10 questions.

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Ask The Right Questions – Question #1

How are you and your firm compensated?

• Fee-Only• Fee-Based• Fee-Offset• Commissions

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Do you have an agreement describing your compensation and services that will be provided in advance of the engagement?

• Yes • No

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Do you have a minimum fee?

• Yes (Please explain)• No

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If you earn commissions, approximately what percentage of your firm’s commission income comes from?

___________% Insurance products

___________% Annuities

___________% Mutual Funds

___________% Limited Partnerships

___________% Stocks and bonds

___________% Coins, tangibles, collectibles

___________% Other: _____________

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Does any member of your firm act as a general partner, participate in, or receive compensation from investments you may recommend to me?

• Yes• No

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Do you receive referral fees from attorneys, accountants, insurance professionals, mortgage brokers, or others?

• Yes• No

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Do you receive on-going income from any of the mutual funds that you recommend in the form of "12(b)1" fees, "trailing" commissions, or other continuing payouts?

• Yes• No

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Are there financial incentives for you to recommend certain financial products?


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Are you currently engaged in any other business, either as a sole proprietor, partner, officer, employee, trustee, agent or otherwise? (Exclude non-investment related activities which are exclusively charitable, civic, religious or fraternal and are recognized as tax-exempt.)


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Will you sign a Fiduciary Oath?

• Yes• No (Please explain)

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FIDUCIARY OATH

The advisor shall exercise his/her best efforts to act in good faith and in the best interests of the client. The advisor shall provide written disclosure to the client prior to the engagement of the advisor, and thereafter throughout the term of the engagement, of any conflicts of interest which will or reasonably may compromise the impartiality or independence of the advisor. The advisor, or any party in which the advisor has a financial interest, does not receive any compensation or other remuneration that is contingent on any client's purchase or sale of a financial product. The advisor does not receive a fee or other compensation from another party based on the referral of a client or the client's business.

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What the Fiduciary Oath means to you - the client

• I shall always act in good faith and with candor.• I shall be proactive in my disclosure of any

conflicts of interest that may impact you.• I shall not accept any referral fees or

compensation that is contingent upon the purchase or sale of a financial product.

Kimberly J Howard May 22, 2007

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Review

• A financial advisor adhering to a fiduciary standard will keep your best interests in mind.

• When seeking an advisor – keep your options open.

• One size does not fit all.• Ask the right questions – you will be happy you

did!

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Questions?

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More Information

• Visit www.FocusonFiduciary.com

• Kimberly J Howard137 Taylor St Needham MA 02494

781.413.4879

www.kjhfinancialservices.com

why do you need to focus on fiduciary ?

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