Recently, we met with a client who was involved in a buyout of his company. It was a pretty exciting time for the client’s life; he went from having a little bit of savings to having life-changing wealth.
As the client’s financial planner, our job was to help the client organize his new-found wealth. We did this by not just investing that wealth into a low-cost, broadly diversified portfolio; we also worked to determine the client’s goals. With the client, we strategized how to use his new wealth to reach his goals.
But, enough about financial planning. Let’s talk about client-advisor confidentiality.
Financial Planning Client Confidentiality
The company buyout was an exciting time for the client. But, it was also a little bit scary. That’s because the company buyout was still inside information; the details of the buyout were not yet public. That’s why it was important for the client to know if what he discussed with us was to be kept confidential. This begs the question:
Is what you discuss with a financial planner confidential?
That’s a great question. And as with all great questions, the answer is: It depends.
Unlike lawyers, financial advisors do not have attorney-client privilege. That is, what is discussed between a lawyer and their client may be kept private.
Client confidentiality is similar – but different – for financial planners. For the most part, everything discussed with our clients is kept confidential. This is because client confidentially is a requirement of CERTIFIED FINANCIAL PLANNERTM professionals. (Taylor and I are both CFP® professionals.)
Of course, there are certain exceptions for CFP® professional-client confidentiality – such as in response to a proper legal process. If you’re interested in the circumstances of when you can’t expect confidentiality from your CERTIFIED FINANCIAL PLANNERTM professional, you can read about them here.
CERTIFIED FINANCIAL PLANNERTM Professional Client Confidentiality
Our client experiencing the company buyout didn’t check any of the boxes for an exception to client confidentiality under the CFP® Board Standards of Professional Conduct. So, when our client asked us about client confidentially, we let him know about those very standards. And with that, our client rested assured that the details of his company buyout would stay between him and his CERTIFIED FINANCIAL PLANNERTM professionals.
With the buyout of his company complete and his financial plan in place, our client was ready for the next phase of his life. What was that? To start a new company! For some (this client included), work is a passion. We can definitely understand that.