The Fight Over Who Will Guard Your Nest Egg

050 - Nest Egg

photo by: Dasroofless

Jason Zweig is a highly respected personal finance writer and editor of The Intelligent Investor column in the Wall Street Journal.  He raises the issue of a “fiduciary standard” versus a “suitability standard” in his most recent column.

One of the key differences between a NAPFA Fee-Only advisor and a broker is that NAPFA advisors serve their clients in a fiduciary capacity.  A fiduciary standard means that your advisor is putting your interests first.  Jason describes why this is important:

“A key factor still is missing from Finra’s suitability requirements: cost. Let’s say you tell your broker that you want to simplify your stock portfolio into an index fund. He then tells you that his firm manages an S&P-500 Index fund that is “suitable’ for you. He is under no obligation to tell you that the annual expenses that his firm charges on the fund are 10 times higher than an essentially identical fund from Vanguard. An adviser acting under fiduciary duty would have to disclose the conflict of interest and tell you that cheaper alternatives are available.

If brokers had to take cost and conflicts of interest into account in order to honor a fiduciary duty to their clients, their firms might hesitate before producing the kind of garbage that has blighted the portfolios of investors over the years.”

About the author

Tim Kober, CFP®

Tim Kober is the founding principal of Cedar Financial Advisors, LLC, an independent, fee-only financial planning firm based in Portland, Oregon. Tim specializes in providing Fee-Only financial planning, investment advice, and hourly consulting to individuals and families.

Prior to founding Cedar Financial Advisors, Tim spent 18 years as a Director of Strategic Planning and other Senior Management positions at Intel Corporation. He played a key role in creating and managing several successful businesses and product lines, and was valued as a trusted advisor to executives and as a leader/mentor to his team.

Tim has taken his passion for investing, solving problems and helping others and applied it to personal financial planning. He applies the same strategic thinking, problem solving, organizational, and communications skills that made him highly effective in a corporate setting to help individuals and families define and realize their personal goals.

Recognizing the critical need for fiduciary financial advisors that help clients reach their goals using sound, academically proven investment strategies, Tim established Cedar Financial Advisors, LLC.

Blessed with a wonderful wife and child, Tim loves outdoor activities such as hiking, cycling, alpine skiing, and tennis. In 2007 he rode in Cycle Oregon, an annual six day cycling adventure. He is active volunteer in his community and at his daughter’s school.

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