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A lawyer is always acting as a fiduciary when holding client funds such as an advance fee payment or the settlement check for a personal injury claim. FIDUTUARY AND STANDARD ACCOUNTS PROFESSIONALSpecifically, the article explored the Ethics Committee’s decision to distinguish between a lawyer’s professional responsibilities under the Revised Rules when handling entrusted funds pursuant to service as a compensated fiduciary and the lawyer’s responsibilities when handling funds as an uncompensated fiduciary. They can currently be viewed at the State Bar’s website: In the first article in this series, I explained the reasons for revising the trust accounting rules (Rule 1.15 et seq.) in the Revised Rules of Professional Conduct. The revised rules appeared in their entirety in the Journal, Vol. The revised rules are now before the North Carolina Supreme Court for approval. The State Bar Council adopted the revised trust accounting rules at its January quarterly meeting. FIDUTUARY AND STANDARD ACCOUNTS SERIESThis is the second installment in a series of articles that explain the revisions to the trust accounting rules in the Revised Rules of Professional Conduct. Individuals are encouraged to consult with a qualified professional before making any decisions about their personal situation.(This article appeared in Journal 5,2, June 2000) Neither the firm nor its agents may give tax advice. They are given for informational purposes only and are not a solicitation to buy or sell any of the products mentioned. Such advice should be obtained from qualified professionals.Īny materials obtained on or through this website which have been prepared or provided by third parties have been obtained from sources believed by KFS to be reliable, but its accuracy and completeness cannot be guaranteed. KFS does not provide legal or tax advice. ![]() It does not constitute investment advice or recommendations, nor is it an offer or solicitation of any kind to buy or sell investment products. The content presented on this website is for informational purposes only. Kelly Financial Services, LLC ("KFS") is an independent SEC registered investment adviser, providing investment advice to individual clients on a discretionary basis. Registration with the SEC does not imply any level of expertise or training. Privacy Policy | Terms of Use | Client Relationship Summary FIDUTUARY AND STANDARD ACCOUNTS HOW TOEssentially, a broker gets compensation only when selling more products, where a fiduciary advisor's compensation goes up only when your account does.Īt Kelly Financial Services, LLC, let us show you how to avoid upfront commissions, hidden fees and murky costs, and align yourself with a fiduciary advisor held to a higher standard of care. A fiduciary advisor has a flat percentage fee of assets, so their compensation is tied directly to how well your account does. Once that broker has made their commission, their compensation is no longer tied to whether your account goes up or down. Another example includes incentives and profit sharing arrangements from mutual fund companies that are received under the promise that the broker-dealer will recommend that company's funds to the client.Įvery day financial products are sold for a commission. Common examples can include proprietary products created by the company that are more profitable when sold, ending up as recommendations for the client. ![]() Also, the need to disclose conflicts of interest is not as strict for a broker. This brings up an obvious issue of loyalty in that the broker's duty is first to the broker-dealer they work for, rather than to the client. FIDUTUARY AND STANDARD ACCOUNTS FULLA fiduciary advisor represents the client only and not the motives and profitability of a company, and is therefore also required to give full disclosure and transparency of any potential conflicts of interests that exist.Ī broker held only to a suitability standard is NOT required to place the needs of a client above his own, but rather only has to reasonably believe that any recommendations made are suitable for the client in terms of financial needs and objectives. When acting in a fiduciary capacity, an advisor is also required to provide advice based off a thorough and complete analysis of a client's entire financial picture in order to be sure any advice given is as accurate as possible. One of the first questions you should be asking any professional is whether they are a Registered Investment Advisor held to the fiduciary standard of care, or a broker held only to suitability standards.Ī fiduciary advisor is required to always place the interest of a client above his or her own, and is therefore legally held to a much higher standard of care regarding a client's wants, needs and goals. There are dozens of questions to ask when interviewing the person you will entrust to manage and safeguard your hard-earned dollars. ![]()
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