Have you noticed all the ads lately for fiduciary financial advisors? Fisher Investments seems to be leading the charge with their message that working with a fiduciary advisor is important. And they’re not wrong. This article explains why working with a fiduciary advisor can be a great decision, what a fiduciary is, and how to differentiate a fiduciary financial advisor from other financial professionals.
WHAT IS A FIDUCIARY?
First, let’s define what a fiduciary is. A fiduciary is someone who has a legal obligation to act in the best interests of someone else. This means that they must put the other person’s interests ahead of their own and make decisions that are in that person’s best interest, even if it comes at a personal or financial cost to themselves.
THE RESPONSIBILITIES OF FIDUCIARY FINANCIAL ADVISORS
In the financial world, a fiduciary advisor is held to a higher standard than other financial professionals who follow a suitability standard.
A fiduciary financial advisor is someone who is legally obligated to act in your best interest. This means that they must make recommendations based on what is best for you, not what is best for them.
They must disclose any conflicts of interest that may arise and explain how they will manage those conflicts. They are required to provide you with all relevant information and discuss the risks and benefits of any investment or other service they recommend. This transparency and loyalty can help build trust between you and your advisor.
HOW TO KNOW IF AN ADVISOR IS A FIDUCIARY
So, how do you differentiate a fiduciary financial advisor from other financial professionals? One way is to look for certain credentials, such as the CERTIFIED FINANCIAL PLANNER™ (CFP®) designation.
Advisors who hold this credential are required to act as fiduciaries at all times. Our retirement planning firm requires all our advisors to have the CFP® certification.
Another way is to look for a firm that is registered with the U.S. Securities and Exchange Commission (SEC) or a state securities regulator. Registered Investment Advisors (RIAs) like our firm are held to a fiduciary standard and must act in clients’ best interests at all times.
If you’re unsure whether your advisor is a fiduciary, don’t hesitate to ask. A fiduciary advisor should be happy to explain their obligations to you and provide you with any documentation you need to feel confident that they are acting in your best interest.
A FIDUCIARY RELATIONSHIP CAN PROVIDE PEACE OF MIND
Working with a fiduciary advisor can be a good decision because they are legally obligated to act in your best interest, are required to disclose any conflicts of interest, and are focused on your financial well-being. Working with a fiduciary financial advisor can give you the peace of mind that comes with knowing that your advisor is looking out for you.
Our fiduciary financial planning and investment management firm offers a complimentary 15-minute call to discuss your financial situation and concerns and share how we may be able to help.
This material was generated using artificial intelligence (ChatGPT) and edited by Kaleido Inc. from information derived from sources believed to be accurate. This information should not be construed as investment, tax, or legal advice.
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