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Our Mission

The mission of Covenant Planning is to provide ethical and individual guidance to clients with respect to income needs, investment advice, tax planning*, healthcare with long term care discussions, as well as trust and estate coordination*. We make every plan unique as every client is unique and brings specific issues and situations that are important to them. We believe in a holistic approach to planning and know that as life changes, your needs change, and we have a process in place to plan for today, tomorrow, and the future.

* Covenant Planning does not provide tax or legal advice. Clients should consult their tax advisor or attorney for such guidance. Any discussion regarding taxes or legal matters is for general information only.

Broker vs. Fiduciary

An independent, fee-only advisor is legally bound to be a fiduciary. The “advisor” part of that phrase is very important. A fiduciary can advise. They can recommend. They can say, “We’re going to make a trade for you because it’s what you should be doing based on your investment strategy and needs.” This is part of adhering to a fiduciary standard that must be legally followed.

Much of this is backed by the Investment Advisers Act of 1940, which states that a financial professional who offers investment advice and charges a flat fee for that advice must be considered a registered advisor. Further, in April 2005, the Securities and Exchange Commission (SEC) ruled that certain broker-dealers are “not to be deemed investment advisors.”

Brokers, as long as they have a relationship with you through a brokerage account where they do not offer investment advice, are not held to the same standard as independent advisors. We’ve seen a lot of variations on the title of “Broker,” which has to make the matter more confusing for investors: Wealth Manager, Financial Advisor, Financial Consultant and Registered Representative are the most common. All of these titles may sound like they are in the realm of being considered licensed fiduciaries but they typically are not.

A fiduciary must act in your best interests first. A broker doesn’t have to.

This is what’s referred to as a “fiduciary duty” and there’s no gray area here – it means that financial professional is legally bound to solely act in your best interest, based on your investment goals such your timeline for retirement.

No fiduciary can recommend an investment that isn’t the very best fit for those goals. If there is a reasonable amount of risk with an investment, for example, he must disclose that risk in accordance with the law. If a conflict of interest exists between the fiduciary and a potential investment based on a past or present relationship, he must disclose that as well. He must provide language in all communication that makes all details of potential transactions abundantly clear.

Contrast this with a broker, who can tout certain financial products that aren’t necessarily the best ones for your needs. A good broker could give some information about a product that seems like a suitable and fair fit, which it may very well be – but it may not be the very best fit due to other sales motivations the broker has.