The Physician Financial Adviser's Hippocratic Oath

As physicians, we take the Hippocratic Oath to swear that we uphold specific ethical standards. Don't you want your financial adviser to do the same?

The good news is that great financial planners do take an oath to put their clients' interests first. It is called a Fiduciary Oath. 

Unfortunately, I'd guess that less than one percent of financial "advisers" take this oath.  The other 99 percent make no such promise, and often put your interests well behind their (and their company's) own.

I am repeatedly astounded by all the ways that brokerages and other commissioned salespeople hide their fees from clients (you).  There are "wrap fees," front-end loads, back-end loads, trading fees, surrender charges, and more.  You will never see any of the fees on a brokerage statement. 

Many of the mutual funds in your portfolio charge you 12b-1 fees that are then kicked back to the broker.  Even worse are “non-traded” real estate investment trusts and other limited partnerships that can carry hidden double digit commissions.

Mutual fund companies also pay bonuses for brokers that sell a lot of their funds a perverse incentive that is financially dreadful.  Many brokerage and insurance company based retirement plans are full of crappy funds that no one would buy voluntarily, but which pay the brokerage/insurance company handsomely to include them in the panel. 

How can you knowingly put your life savings in the hands of someone who does not put your interests first?  Ask your current adviser if he is a fiduciary for you. 

Ask them to disclose all the fees you pay.  I think (I know) you will be surprised at the answers. 

Brokers hide behind a “suitability” standard, which basically allows them to sell you almost anything with high expenses.

If you are looking for a new financial adviser, consult the National Association of Personal Financial Advisors.  It is an association of fee-only planners that all must take the oath to be a fiduciary for their clients.  Doing anything else with your money is certain to do harm to the patient.