Financial Planning and Fiduciary Services
At Pivotal Financial Advisors LLC, we recommend that advisors focus on a consultative approach to financial planning aligning their practices more with the impartial conduct standards. The impartial conduct standards are “consumer protection standards that ensure that advisors adhere to fiduciary norms and basic standards of fair dealing.” The standards can be designated as:
- The “best interest” standard – requires that advisors always act in the best interest of a “retirement investor.” The “best interest” standard actually consists of two separate fiduciary standards: the duty of prudence and the duty of loyalty.
- The “reasonable compensation” standard – requires that an advisor only receive “reasonable compensation in exchange for the advice and/or services provided to a customer.”
- The “misleading statements” standard – prohibits any misleading by an advisor regarding investment transactions, compensation, and conflicts of interest.
Our suggested approach allows advisors to provide their clients the capability of aligning their money and life with their values and goals in complete transparency.
Establish and define the client-planner relationship
Advisor clearly explains the services to be provided to client and defines advisor responsibilities, including fees and the length of the relationship.
Identify values and goals; gather financial and personal data
Advisor mutually defines client’s personal values and financial goals, understands client’s time frame for results, and determines client’s tolerance for risk.
Analyze and evaluate financial status
Advisor analyzes and documents client’s information to assess client’s current situation and determine what they must do to meet their goals. This may include analyzing assets, liabilities, and cash flow; insurance coverage; investments; college and estate plans; charitable gifting; tax strategies; or other services as needed.
Develop financial planning recommendations and alternatives
Based on the information provided by the client, advisor presents a detailed financial plan along with an executable plan of action to address client’s values and goals. This detailed plan could be written or verbal. Advisor and client then collaboratively review the plan so the client can make informed decisions.
Implement financial planning recommendations
Advisor and client come to an agreement on how the recommendations will be carried out and clearly define which steps need to be completed prior to executing the plan.
Monitor and adjust
Advisor monitors client’s evolving financial situation and coordinates the entire process with the client and other professionals such as attorneys and accountants.