Conflicts of Interest and the Duty of Loyalty

This is an excerpt from the Mister Fiduciary blog. You can read the entire blog post at https://misterfiduciary.com/blog.

Although the SEC requires fiduciary financial advisors to “eliminate or make full and fair disclosure of all conflicts of interest” that could lead to bias or cause one’s advice to be tainted, this clause does not expressly forbid the existence of conflicts of interest. Charles “Chad” Weinstein, Founder and President of Ethical Leaders in Action, says, “Having a conflict of interest isn’t necessarily a dealbreaker, but it is important to disclose any conflicts of interest to clients and mitigate them whenever possible. At every step, transparency is essential.”

A true fiduciary financial advisor will first endeavor to mitigate their conflicts of interest, even though they are technically permitted as long as they are disclosed. In our interview together,[1] Chad Weinstein said, “The laws surrounding fiduciaries should be thought of as the legal floor or guardrails. They are the minimum standards a fiduciary is required to meet.” A fiduciary financial advisor could choose to only stay within these legal parameters, but those who truly wish to serve their clients with integrity and prudence will go beyond the bare minimum.

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