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Is Your Financial Advisor A Fiduciary?



By Karl Anvik, BSc, MA, CIM®, CFP®


Do you know if your financial advisor is acting in your best interest? Some financial advisors are bound by ethical and legal obligations to put their clients’ needs first, but others are not. If you weren’t aware of this, you may want to check that your financial advisor is attentive to your needs first and foremost—not their own.


Since the 2008 Great Recession, the Canadian Securities Administration has more closely scrutinized the standards financial professionals are held to when providing investment and financial advice. But the fact remains that there is no requirement for all financial advisors to act in their clients’ best interests. It’s up to you to make sure your advisor is a fiduciary.


What Is A Fiduciary?

A fiduciary is a person or organization that acts on behalf of another person and is legally and ethically bound to act in that person’s best interest. To be considered a fiduciary, the Canadian Securities Administration has determined that an advisor must ensure:

  • Client interests are paramount

  • Conflicts of interest are avoided

  • Clients are not exploited

  • Clients are provided with full disclosure

  • Services are performed with reasonable prudence (1)

Your financial security is paramount to your well-being. You work hard your entire life to build and protect your wealth, so you want to be sure your hard-earned assets are also protected by the professionals you partner with. Working with a financial professional requires a degree of vulnerability, so you should only partner with professionals who put your best interests first.


What Kind Of Financial Advisors Are Fiduciaries?

Not all advisors or wealth managers are fiduciaries. Some financial professionals, such as trustees, are always fiduciaries. But others, including broker-dealers, wealth managers, and financial advisors, vary in their fiduciary responsibilities depending on their legal status, the services they perform, and the credentials they carry.


For instance, broker-dealers are advisors who make trades on behalf of their clients, but can also trade securities for themselves. Some broker-dealers sell in-house investment products, while others sell products from outside sources. These practices can create conflicts of interest, as broker-dealers may be motivated to sell products to receive a high commission—even when those products aren’t a good fit for the client.


How Do You Know If Your Advisor Is A Fiduciary?

Different types of advisors are more likely to be fiduciaries than others. Broker-dealers are almost never fiduciaries, while fee-only financial planners almost always are. You can look to your advisor’s title to help you determine whether or not they might be a fiduciary.


Specific advisor designations are another clue. Advisors carrying the Certified Financial Planner (CFP) designation are held to fiduciary standards by the FP Canada Standards Council™, which includes a Code of Ethics requiring CFPs to act in their clients’ best interests. You can also often tell if an advisor is a fiduciary based on how they’re compensated. If they receive commissions, they’re not a fiduciary.


The simplest way to find out if your advisor is a fiduciary is to ask them. If an advisor claims to be a fiduciary when in fact they are not, there are legal consequences. It’s never too late to ask your advisor if they’re a fiduciary. If they’re not, they should be able to clearly and concisely explain why.


Northfront Financial Inc. Is A Fiduciary Firm

The fiduciary standard is one of the top criteria you should consider in a financial advisor. Fiduciaries want to help you reach your financial goals, not their own. When you work with a fiduciary, they do well when you do well, so their motivation rests on your success.


At Northfront Financial Inc., we have a legal requirement and duty to act with the utmost care, in good faith, and always with our clients’ best interests at the forefront. Enjoy more peace of mind in your financial planning and wealth management by partnering with a fiduciary firm. Please call 403-571-8960 or email info@northfront.com to schedule a meeting with us today.


About Northfront Financial

Northfront Financial is a boutique full-service financial planning firm serving individuals and families in Calgary, Alberta. We pride ourselves on being a different kind of investment firm. This stems from our humble roots, entrepreneurial spirit, and a culture of integrity and professionalism. Our goal is to offer the best investment products, services, advice, and ideas the financial industry has to offer from our experienced team, which includes individuals with the Chartered Financial Analyst (CFA), Chartered Investment Manager (CIM), and Certified Financial Planner (CFP) designations. To learn more about Northfront Financial and how we can help you, visit our website and schedule a complimentary appointment.

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(1) https://www.osc.gov.on.ca/en/SecuritiesLaw_csa_20121025_33-403_fiduciary-duty.htm


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