As usual, Morris Armstrong raises a valid, and very popular, point in his response to my latest posting, which warrants some further exploration.

How can an employee of a broker/dealer [or an independent rep, for that matter] ever be a fiduciary when their income will be coming from another entity? How do you tie in the fact that [some] CFPs will be receiving commissions and yet are being called fiduciaries by the CFP Board of Standards?

These two questions strike at the heart of THE issue that has plagued financial planning since its inception in 1969. As much in those early days as today, many planners want to be respected as professionals, yet compensated as salespeople. The legal legerdemain for this is called "the scope of the engagement."

This is a bit of obfuscation in which a financial planner (or stockbroker) claims that when offering financial advice they have a fiduciary duty to their client; but when implementing that advice, they are merely salespeople, and therefore have no such duty under the Investment Advisers Act of 1940. I suppose this is an impressive trick, worthy of the high-priced legal minds on Wall Street. But make no mistake, that's all it is. The client, of course, has no idea when his or her "advisor" is representing him or her, or when the advisor is representing his brokerage firm.

Imagine a medical system under which sometimes your doctor is really your doctor, with your health her primary concern, but other times she's working for Merck, with the job of moving as much "product" as she can. How much trust could you put in her advice? It's a situation no real professional would work in. And to finally evolve into a profession, it's one that financial planner will have to resolve in favor of wearing only one hat–a white one.