What We Mean by True Fiduciary® Standards and Why It Matters

What We Mean by True Fiduciary Standards and Why It Matters

We all work with an array of professional experts throughout our lives, almost all of whom we expect to adhere to a certain basic ethical standard, one that allows arm’s length dealings and no hidden motives.

We all work with an array of professional experts throughout our lives and we expect them to maintain a certain basic ethical standard, one of integrity, transparency, and no hidden motives.

We expect our coaches to pull out all the stops (within the bounds of the rules) to win.

We expect our doctors to faithfully follow the Hippocratic Oath.

We expect our attorneys to advocate vigorously for our best interests.

But what would you do if you found out that your team’s coach bet on games in which he participated, whether it was for your team or against it? How would you feel if you found out that your doctor accepted kickbacks from a pharmaceutical company to prescribe drugs with harsh side effects when a better solution was available? What would you think if you found out that your attorney had hired his friend as an expert witness in your case, rather than someone who was a more respected expert in the field?

You would rightfully be horrified. And you would be smart to run the other way.

But many people don’t hold their wealth managers to the same basic standards. They assume that they are the experts and that their fees, purchases, and advice is there for a reason, with the best interest of you, the client, at heart.

At times, nothing could be further from the truth.

Think about it this way: if your financial advisor can’t explain how he or she has made your life easier in simple language, without conflicts of interest, how can you be sure he or she is acting across the board in your best interest? By removing potential for doubt or concern, you can simplify your life and stand to reap the rewards that you’ve worked diligently for all of your life.

We’ve all heard the horror stories about people who’ve lost everything due to faulty financial advice. But lost in that dialogue is the tale of the many ways that hard-working Americans are “nickeled and dimed” by their financial advisors. Hidden fees, undisclosed commissions, and obligations to outside firms that seem small on the front end, but that eventually can take a huge chunk out of your portfolio.

While the details of each investment mechanism and life-planning strategy may not be abundantly clear to you, your advisor should be able to explain in simple terms what they aim to achieve. Just as importantly, he or she should be transparent about the costs passed through to you, his or her approach to protecting your assets, and the ways in which he or she simplifies your life and minimizes your worries.

Often when we speak to prospective clients, they believe their brokers are fiduciaries. However, that is typically not the case, because at the big banks and brokerages, being a fiduciary would likely diminish their profits.

Although big banks and brokerages often claim to have “fiduciary services“ or state that they act “like” a fiduciary, it is a matter of semantics. In reality, they often are not fiduciaries and do not serve their clients as such. To avoid being duped, an investor should directly ask the question, “Will you serve me

and my family as a fiduciary? Are you bound by the fiduciary standard?” If the answer is anything other than “Yes,” that should give you pause.

We strongly believe that there is no “gray area” when it comes to being a fiduciary. These are black-and-white issues, where clear best practices should be obvious and universal. That is why TRUE is committed to our True Fiduciary® Standards, which are 10 standards we hold to in order to ensure your best interests always come first. They are:

1. Embrace the Legal Fiduciary Obligation to Place Clients’ Interests First

2. Deliver Comprehensive Financial Planning

3. Provide Fee-Only Advice

4. Do Not Accept Commissions

5. Be Transparent on Client Costs, Fees, and Terms

6. Provide Transparency on Portfolios and Investments

7. Remain Independent from any Bank, Broker Dealer, Insurance, or Custodian

8. Measure Client Performance Returns Using Independent Third Parties

9. Do Not Price Any Public Securities

10. Do Not Physically Hold or Possess Any Client Assets, Securities, or Money

At TRUE, our sole focus is on your best interests. Our True Fiduciary® Standards exist to help ensure you receive transparent advice focused on asset protection, growth, and helping you achieve the legacy you desire.


About Cresset

Cresset is an independent, award-winning multi-family office and private investment firm with more than $45 billion in assets under management (as of 04/01/2024). Cresset serves the distinctive needs of entrepreneurs, CEO founders, wealth creators, executives, and partners, as well as high-net-worth and multi-generational families. Our goal is to deliver a new paradigm for wealth management, giving you time to pursue what matters to you most.

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