Financial-Planning Article Highlights Advisor Conflicts of Interest

The website, Financial-Planning published an article yesterday titled, “Northwestern’s CFP disclosures put industry’s fraught questions in focus” that highlights how the firm is reacting to the CFP Board’s Standards of Conduct.

These standards of conduct require (among other things) that advisors owe certain duties to clients. These include a “Fiduciary Duty” that reads “[a]t all times when providing Financial Advice to a Client, a CFP® professional must act as a fiduciary, and therefore, act in the best interest of the Client.”

The standards of conduct continue with a “Duty of Loyalty” which includes the requirement that a CFP® professional must “[a]void Conflicts of Interest, or fully disclose Material Conflicts of Interest to the Client . . .”

Tobias Salinger, author of the article, explores a disclosure document created by Northwestern Mutual in order to assist advisors in complying with the CFP Board’s code of ethics and standards of conduct. The document highlights the material conflicts of interest that Northwestern Mutual financial advisors face through their affiliation with the company.

Physicians who are working with a financial advisor should make sure that they understand how their advisor is being paid, as well as any underlying material conflicts of interest that advisor may have. For physicians looking for a financial advisor, make sure you understand if those you interview have an obligation to their parent company to sell proprietary products.

While this disclosure document is a step in the right direction, consumers should ask themselves if they want to partner with an advisor who has to deal with those conflicts on a day-to-day basis.

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Disclaimer:

The content provided is for informational purposes only. Yes, I’m a financial advisor, but this article isn’t intended as advice for you specifically. Your unique situation needs to be taken into account, and the ideas presented here may not apply. 


Donovan Sanchez