What is the initial duty of a financial planner who discovers computational errors made by a previous advisor?

When a financial planner discovers computational errors made by a previous advisor, the initial duty is to inform the client of the situation. This duty is grounded in the ethical obligation to act in the best interest of the client. Transparency is crucial in maintaining trust, which is foundational in the client-advisor relationship. By promptly communicating the issue to the client, the planner ensures that the client is aware of the potential implications these errors may have on their financial situation or long-term planning strategies.

This approach allows the client to make informed decisions about how to proceed. The financial planner has a responsibility to clarify the nature of the errors, explain their potential impact, and discuss any necessary corrective actions. Providing this information empowers the client to engage actively in their financial planning process, which is essential for fostering a collaborative and proactive financial planning environment.

While reaching out to the previous advisor, the CFP Board, or the IRS may also be important steps to consider, the priority lies in directly addressing the client. Legal or regulatory obligations may arise later, but the immediate need is to protect and inform the client regarding potential inaccuracies in their financial management.