You will hear me use this term, Fiduciary, repeatedly in my posts.  Why do I need a Fiduciary?  If you can understand this concept, and embrace it in your life, you will be lightyears ahead of your peers.

The highest legal duty of one party to another, being a Fiduciary required being bound ethically to act in the other’s best interests.  This concept is extraordinarily counterintuitive to basic human wiring, especially when a sale is involved.  In what world can a person who is tasked with a job to sell a product or a service, to make money to support his family, act in this capacity?  Think of how many industries would start to lose money if they embraced this and started telling their clients, customers, patients what they really ought to do to find the most efficient solution for their wants/needs/problems.  So you ask — why do I need a Fiduciary?  Here is a rudimentary analogy for this concept.

Barista – Hi, welcome to Starbuck’s can I take your order, please?

Me – I will take a grande iced latte, please.

Barista – You know what, let me just make you a double espresso over ice, which has more caffeine, and I can add some cream and sugar and save you $1.40 before taxes.

Me – Wow, thanks so much for saving me money and reducing the profit of your publicly traded company that makes money selling to consumers who are not well educated in coffee.

This NEVER happens.  BUT, if the Starbuck’s Barista was a true Fiduciary, she would be taking the time to understand the customer’s goals with their order and explaining the difference between their lattes, cold brews, and espressos.  If the barista understands what the customer’s goal with their Starbuck’s order is, she could maximize their objective with their caffeine and flavor needs to recreate the most efficient drink per ingredient for the lowest price.

If I were trusting someone with my hard-earned money, I could see why I need a Fiduciary.

Let’s use an example in medicine.

Dermatologist – Hi Mr. P, I see a couple of moles on your back.

Me – Are they cancerous?

Dermatologist – No, but just to be safe we should burn them off.

Me – I have had these moles for as long as I can remember.

Dermatologist – Sometimes these moles can evolve and become skin cancers, so we recommend burning them off just in case.

Me – How much does it cost?

Dermatologist – $150 per mole.

Me – Well, I suppose you are a DOCTOR, and you are looking out for my best interest, so okay go ahead and burn them off.

Although the doctor confirmed that at this moment in time, these moles were not cancerous, she used her position of trust to profit.  Maybe the dermatologist down the street would have opted not to make any money and save my body the scarring.

Does Fiduciary Do

Do your other advisors act in a Fiduciary Duty and put your interests and needs before their own?

Please, please please – there are plenty of great Fiduciary Advisors, do yourself a favor and work only in a Fiduciary Capacity.  More to come @lifemanaged_

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