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Posted by eagent on January 23, 2008, 2:04 pm
>
> > All
>
> > I am considering a CPA / Investment firm. My question is about
> > Fiduciary responsibility: How important is it when choosing a firm?
>
> > thanks
> > daben
>
> What do you mean? A fiduciary duty exists when an appointed agent is
> legally bound to in the best interest of the principal. Depending on
> the services being performed a fiduciary duty may or may not exist.
> Furthermore, you don't get to choose when it does and doesn't.
> Trustees, board members, real estate agents, and a wealth of other
> individuals are held to a fiduciary duty.
>
> Fiduciary duties are extremely important but the level of dilligence
> applied by each firm is difficult to measure (which is what I THINK
> you are asking). I would consult friends, family, and associates that
> you respect as to whom they use.
>
> If you enter into an engagement where a fiduciary duty does exists,
> understand that it is not unreasonable to have your agent thoroughly
> explain their actions. If he/she cannot explain why his
> recommendations are best for you and why the alternatives are not,
> then run.
Agreed, but with my 2 cents added in -
We also have to keep in mind that it can be difficult to measure
compliance with a fiduciary duty because the nature of the
relationship is subject to interpretation and application and requires
untold amounts of personal preference. I like investment company A
because I DO and as long as that company's investment is in line with
your goals I probabaly have met my fiduciary duty in recommending that
investment - EVEN if company B may be better for someone reason - EVEN
if I'm not aware of company B's existence at all.
AND while a fiduciary responsibility may be created by a matter of law
or regulation, most people won't know that it wasn't properly
exercised until it is too late.
Additionally, just because a fiduciary duty does exist as a matter of
rule of law DOES NOT MEAN that your best interests are not forefront
in the professional's mind. Many advisors who are NOT bound by the
legal parameters of fiduciary duty STILL put the client's needs first.
The important thing to remember is this - Caveat Emptor or Buyer
Beware - the best defense you can have is a thorough understanding
FIRST of your goals, then of the recommendations you get and how they
fit in your portfolio.
Lastly, I would make one small change to Kastnna's final paragraph by
saying Whenver you enter into an engagement of ANY KIND WITH ANY ONE,
it is certainly reasonable to have your agent thoroughly explain
themselves and if they cannot do so to your satisfaction, then take
your business elsewhere.
Gene E. Utterback, EA, RFC, ABA
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