We Look Out for Your Best Interest

What Is a Fiduciary?

Financial advisors acting in a fiduciary capacity are legally and ethically required to act in their clients’ best interests. They have a duty to be loyal to their clients and ensure they disclose any potential conflicts of interest. Any advice they give should be based on the client’s financial situation and investment goals and must be in the client's best interest. 

A fiduciary advisor can’t, for example, suggest you buy a security that will pay them a commission but not benefit you. Their first priority is giving you advice to help you reach your financial goals. 

Choosing a fiduciary financial advisor can help protect you from being misled or mistreated. It means you have a professional in your corner rooting you on as you journey toward financial security.

How Can You Tell If Your Advisor Is a Fiduciary?

While some advisors may use the term lightly, not all advisors are fiduciaries. Wall Street brokerage firms can sell proprietary products that benefit the firm and the advisor, so their advice may potentially be biased. It’s worth it to make sure your advisor is working in your best interest. If you’re not sure that your advisor follows the fiduciary standard, ask them these three questions.

1. Are You a Fiduciary Advisor?

Let’s start with the most obvious question. Yes, you can ask an advisor if they’re a fiduciary! They should be able to give an unequivocal “yes” and put it in writing. Anything less should be cause for concern. They should also provide you with a copy of their Form ADV Part 2, which discloses their obligations as a fiduciary advisor.

2. How are financial planners paid?

Financial advisors get paid all types of ways—from flat hourly rates to a combination of fees and commissions. There’s nothing wrong with any of these payment methods, but many fiduciary advisors are fee*-only while in an advisory relationship.. This may help minimize conflicts and ensures that your financial planner acts in your best interest.

3. What Is Your Financial Planning Process Like?

While following a fiduciary standard we asks questions and get to know your financial goals before they ever make investment recommendations. They know that a good look at your entire financial picture is paramount to your long-term success. So, ask your advisor to describe their financial planning process. If it doesn’t start with you, keep looking.  

*In a fee-based account, clients pay a quarterly fee, based on the level of assets in the account, for the services of a financial advisor as part of an advisory relationship. In deciding to pay a fee rather than commissions, clients should understand that the fee may be higher than a commission alternative during periods of lower trading. Advisory fees are in addition to the internal expenses charged by mutual funds and other investment company securities. To the extent that clients intend to hold these securities, the internal expenses should be included when evaluating the costs of a fee-based account. Clients should periodically re-evaluate whether the use of an asset-based fee continues to be appropriate in servicing their needs. A list of additional considerations, as well as the fee schedule, is available in the firm's Form ADV Part 2 as well as the client agreement.