SEC Chairwoman Mary Schapiro

Lawmakers and regulators are jumping on the fiduciary-duty bandwagon after the Securities and Exchange Commission’s fraud charges against Goldman Sachs and subsequent hearings. Several senators have or plan to introduce amendments to the financial overhaul legislation, and SEC Chairman Mary Schapiro has backed the standard. “I believe that broker-dealers and investment advisers providing the same services, especially to retail investors, should meet that same high fiduciary standard,” Schapiro said.

Many of the firms who bought investments from Goldman Sachs and other broker-dealers could have avoided huge losses had their been a fiduciary standard in place at the time.  A fiduciary is required to act in the best interest of their clients.  They also have to fully disclose sources of compensation and any possible conflicts of interest.  This way the client knows more fully what they are getting into, and why the advice or recommendation is being made.

This is the standard that investment advisors and Certified Financial Planner certificants are held to, and it protects the client. 

I don’t agree with everything that the SEC does.  They totally ignored the Madoff scandall even though they were given many clear warnings, tips and documentation about what was going on.  But I do have to agree with them on this point, that anyone giving investment advice should have to act as a fiduciary to their clients.  There are too many ways that financial companies and brokers can take advantage of consumers, and many of them do.  Sure, if an investment is a registered mutual fund, the fees and expenses are all disclosed in the perspectus.  But most people won’t read them, or if they do read them it’s too confusing to understand.

If you are working with a Certified Financial Planner Certificant, you know you have someone who is held to a higher standard.  Now that doesn’t mean that all CFP’s are honest, you should always check out someone’s backround and complaint history.  But if a CFP doesn’t act in the best interest of a client, he won’t be a CFP for long.  The CFP Board will strip someone of the designation if they are found to be acting dishonestly.  If you’re working with an independant CFP who doesn’t have sales goals that they have to meet, then you know they don’t have someone looking over their shoulder to make sure they’re selling enough of this or that.

This all comes down to doing the right thing for the client.  When you’re putting your faith and trust in an “expert”, you shouldn’t have to worry about someone lining their pockets for the “expert advice” they are giving you.  It’s definitely getting better out there, but we have a long way to go.

Volunteer with high school students in Tanzania

So you’re at a point in your life where you’re ready to quit the daily grind and start following your true passion.  For many people today, this means doing some kind of humanitarian work, missionary work or other volunteer activities.  It’s the time in your life when your days are just as busy as ever, buy your only pay is the heart-warming satisfaction that comes from giving back.  It’s a time when most people find that in serving others, they grow more than they ever thought they could.

Preparation For Service

Whether you’re planning to serve in another state, or in a foreign country, there are a lot of things you need to prepare for prior to leaving.  In addition to making arrangements for your house, car, & utility payments, there are a lot of financial things to think about.

Power of Attorney

A power of attorney gives someone else the power or authority to act in your behalf in legal or business matters.  This obviously needs to be someone you trust very much, like a family member or trusted advisor.  This person can sign binding documents in your behalf and do pretty much anything you could do for yourself (with the exception of changing a will).  If you are serving somewhere in Africa you will not very easily be able to sign a tax return, or endorse a check that needs to be cashed.

Online Account Access

These days you have to be pretty darn remote to not have online access to your financial accounts.  But there are STILL a lot of places you could go where your only source of power would be from a currant bush.  Just in case you do have an opportunity to get on the web at some point during your mission trip, you’ll most likely want to check in on your bank & brokerage account balances.  Here, you can usually also get copies of tax forms too which can be very helpful.  Make sure that wherever possible, you are set up for online account activity.

Insurance Coverage

You may be going to a place where you’ll have healthcare provided to you as part of the project.  But in the event that you’re on your own for health care, you need to make sure that you have adequate health insurance.  You can buy foreign travel health insurance if you need to, but you’ll want to do your homework on it.  If you’re serving stateside and you don’t yet qualify for Medicare, you’ll want to make sure you have a good health insurance plan with a nationwide network of doctors.  If you need to get some health insurance quotes, go to www.TurningPointBenefits.com.

Investment Management

Your investments are one thing you definitely want to have someone keeping an eye on for you while you’re gone.  This could help you avoid a terrible financial disaster, and help you to relax and focus on what you’re there for.  Choosing a good money manager who will put your best interests first is a critical to making this work.  Hiring a Certified Financial Planner will help ensure that your advisor is looking out for only you.  See my previous post called Why Work With A CFP? for more information as well.  Asking a family member to take care of this might save you a little money in the short run, but could cost you royally in the long run.  An experienced & trustworthy financial planner will be worth their weight in gold.  You will always be able to communicate by email and get your statements and trade confirmations online as long if you have internet access.  Also, most banks and financial firms can forward your paper account statements to overseas addresses as well.

Now Go To Work!

Once you’ve taken care of these critical financial issues, you can focus on your volunteer service whole heartedly.  Now it’s time to get your VISA and get to work!  Good luck!

If you would like to talk with us about helping you with any of the financial matters listed above, CLICK HERE.

These days it seems that everyone in the financial services industry has some letters displayed after their name, indicating that they hold some sort of professional designation. There’s CPA, CFP, CLU, ChFC, PFS, CMFC just to name a few. Like alphabet soup, there are lots of letters and they don’t really seem to spell anything. Many people don’t understand what these designations mean – such as “Senior Specialist” or “Retirement Advisor” – or what is required to obtain and keep the various designations.

Today there are over 90 designations, degrees, titles, certifications, and accreditations available in the financial services industry.  For this reason, investors need to be very careful not to assume that just because a person has some letters after their name, that they are an expert in handling your financial needs. Some designations represent legitimate expertise, while others are merely marketing tools. For more information on the meaning of various designations, visit ’s FINRA’s website and click on the “Investor Information” tab, and do a search for “understanding professional designations”. You will be able to type in the letters of the designation you would like to find out more about the issuing organization, prerequisites and education requirements, continuing education requirements, and exams that must be passed.

Here are a few good designations to look for:

CFP or Certified Financial Planner. The CFP is the most comprehensive financial planning designation that a professional can earn. It requires that a candidate complete a series of courses approved by the Certified Financial Planner Board of Standards. Each course requires the passing of a final exam, and then a comprehensive final exam must be passed at the end. A CFP has studied all areas of financial planning including: retirement planning, estate planning, investments, insurance, & taxes. Candidates must also have 3 years of personal financial planning experience and a Bachelors degree, or have 5 years of personal financial planning experience. Another big benefit of working with a CFP is that they are required to act as a fiduciary for their clients. This means that they must do what is in the best interest of their client no matter what. This reduces the risk of an advisor selling something to a client that may not be in the clients’ best interest, all because the advisor was thinking about how they would be compensated. CFP are required to complete 30 hours of continuing education training every two years.  This helps keeps them on the cutting edge of changes in the industry.

ChFC or Chartered Financial Consultant. The ChFC designation is issued by The American College, an accredited university specializing in financial education. A candidate must have at least 3 years of full-time financial services business experience in the 5 years preceding the awarding of the designation. They must complete 6 core and 2 elective courses that cover most of the same information that a CFP will study. Each course has a final exam, but there is no comprehensive final exam required. 30 hours of continuing education training every 2 years are required, which also helps to keep an advisor in the forefront of the financial services industry.

Be Wary

Watch out for designations that take a few days of classroom study, or a few hours of self-study, plus a fee to earn.  These types of titles are generally just marketing tools to trick people into thinking they are working with an expert (and a way for the issuing organization to make some money).  Do a little homework and don’t be afraid to ask a few questions, you’ll be very glad you did.