One of the three main principles of being a financial fiduciary, which New Capital is, is the requirement to either eschew or disclose any conflicts of interest to clients.  Conflicts of interest in the financial advisory industry occur most often and clearly when recommending investments to clients: does the advisor receive compensation from the investment sponsor or from any other entity for making a recommendation?  The fee-based advisory industry has grown rapidly by often emphatically answering that question “No”.

But investment compensation is not the only conflict of interest that an advisor may have.

Here are just a few others:

• Does an advisor maintain viewpoints that prevent them from viewing national political events (including evidence presented in a Presidential impeachment trial) fairly and objectively, and which could lead to portfolios getting “blindsided”, for example, from excessive home bias?

• Does an advisor maintain viewpoints that prevent them from viewing government fiscal policies objectively, and which could lead to their portfolios getting blindsided, for example, from insufficient inflation protection?

• Does an advisor maintain viewpoints that prevent them from viewing central bank monetary policies and asset valuation objectively, and which could lead to their portfolios getting blindsided, for example, from assumption of excessive risk?

• Does an advisor maintain viewpoints that prevent them from viewing the present and historical benefits of liberal democracies, technological innovation, trade, immigration, environmental protection, social justice, and labor protection, and which could lead to their portfolios getting blindsided, for example, from failing to assume sufficient risk?

• Most critically, does an advisor maintain viewpoints which prevent them from seeing your life goals, charitable goals, career choices, lifestyle choices, educational goals, financial goals, and values - which basically prevent them from seeing you - as authentic, worthwhile, and valuable?

If you suspect that any of these conflicts of interest may be present in your advisory relationship, you may wish to reconsider that relationship, for the benefit of both your portfolio and your life.

Leonard Golub, CFA
Fiduciary Financial Advisor

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