Fiduciary Standards

A Fiduciary Shift

Too often the financial industry is driven by product sales, which compromises the client’s interests. Shikha Mittra AIF©,PPC ©,CFP ©,CRPS ©,CMFC, president and principal of Retire Smart Consulting, a fee only wealth management firm, is an adamant supporter of fee-based advising, and says it’s the only way clients can be certain that the advice they receive is in their best interests – and not the advisor’s.

“Whenever there’s a commission or revenue sharing arrangement and you are leaving the decision to a non-fiduciary for selecting investments   whether in your personal investment portfolio or for  your company’s retirement plan and your advisor is compensated based on that, it might create a conflict,” Mittra said, explaining why she supports the fee-only model. “When you are acting as a fiduciary, you have to provide a course of action which is in best interest of the client.”

Fiduciaries, such as Mittra, are legally bound to work on the same side as clients, protecting their best interests. “We are not trying to sell any investment products – period. That takes the conflict of interest out of the relationship,” she added. We follow a prudent process of managing the retirement plan investment portfolios based on global standards of excellence. We have a strict due diligence criteria for selecting, monitoring and replacing funds which helps sponsors and foundations reduce their fiduciary responsibility.

“As long as there is level compensation for the advisor, whether the client chooses one investment or another, there shouldn’t be a conflict.”

Mittra explained that while pay-per-play was the industry norm, new regulations and a shift toward fee-based planning is beginning to create a ripple effect of change in the product and services offered.

As the deadline for compliance with the DOL’s (Dept of Labor) updated Fiduciary Rule is fast approaching (4/10/2017), and increased litigation by disgruntled employees, retirement plan sponsors of small to mid -sized companies are getting concerned if they are meeting the fiduciary standards. That’s where we can add value.

“A lot of insurance products are based on commission, and that’s where we are seeing a lot of changes happening,” Mittra said. “Only time will tell, but that’s where we see the industry going.”
Technology is also creating a shift in the industry, especially for younger investors, but Mittra cautioned that robo-advisors are only useful for the most basic investing needs.

“For customized solutions, you still need personal interaction with an advisor. That’s where customization happens,” she said, adding that every situation requires unique customization. If personal planning, we need to align with a client’s anticipated lifestyle, living and medical expenses during retirement. For company sponsored 401K, we start with an Investment Policy Statement(IPS)which defines the objectives, responsibilities, risk, return and due diligence criteria for selecting, monitoring and rebalancing the investment portfolios based on the unique needs of the employer.

Although Mittra has received several industry awards, she measures her true success by the success of her clients, and says receiving thank you cards from clients thanking her for the difference she’s helped make in their financial lives is as good as any award. “I treasure each card I get from my clients. It is very dear to me.”

For more information visit:

Follow Us

Subscribe to Our Newsletter

What's Next, Updates & Editorial Picks In Your Inbox

© 2017-2021 Advisors Magazine. All Rights Reserved.Design & Development by The Web Empire