A potential of conflict exists in every professional engagement. The goal is to minimize the potential by compensating your advisor for the work itself—not for transactions executed or products sold—by transparency of fees and through full disclosure of potential conflicts.
One common issue illustrates a potential conflict and how we handle it. We advise clients on debt management. Paying off a mortgage reduces the assets that we manage, and our fee along with it. Our fiduciary obligation is to place clients’ interests ahead of ours, so if paying off the mortgage is the right move for the client, that’s what we’ll advise.
This isn’t just our ethical obligation; it’s also a good business strategy—we get all of our clients by referral, and it’s more important to us to have a satisfied client with a smaller amount of assets than an untrusting client with more money—or, worst of all, no client at all.
