How to verify a fiduciary advisor
Are the professionals providing you financial advice acting as a fiduciary? Here’s how to verify a fiduciary advisor.
When you need critical health, legal, or tax advice, you probably seek the services of an expert. You assume this “expert” will give advice that is intended to give you the very best outcomes specific to your personal situation. You do this for two reasons. First, because the advice you get could change the course of your entire life. Second, this advice could also significantly affect your entire family for generations.
How to Verify a Fiduciary Advisor
The term used to describe the professional whom is providing this level of advice is fiduciary. A fiduciary is required to always put you first and to avoid (or minimize when unavoidable) conflicts of interest.
The decision you make regarding who you get financial and/or investment management-related advice from can be just as important. Financial and investment management-related advice often overlaps with health, legal, and tax advice. With this in mind, shouldn’t you expect the same level of professional conduct? Wouldn’t you expect to pay a fair rate for the advice given? But how do you know what is fair?
Important Terms To Help You Verify a Fiduciary Advisor
“Fee-Only Financial Advisor”
First big term to discuss – is “fee-only financial advisor.” If you have ever asked around for a referral to a financial planner or investment fiduciary, you may have heard the term “fee-only”. What this means is that the fee-only financial advisor works for you (the client) and only gets compensated by you for advice, plan implementation, and/or ongoing asset management.
In doing so, the fee-only financial advisor is always acting as a fiduciary (for you). This is why we believe you need a fee-only financial advisor
“Fee-based Financial Advisor”
Second, another term that you might run across is a “fee-based” financial advisor. Although this sounds like a fee-only financial advisor, it is significantly different. How so? Being fee-based allows the financial advisor to get paid by the client and other sources, such as commissions from financial products that they sell to you.
When getting paid for selling you things, they are working for the financial firm (not you), which is a significant conflict of interest. Conversely, some fee-only financial advisors, S.E.E.D. included, offer fixed fee arrangements, where-as you would pay a flat fee, regardless of how or where you invest your money.
Importance of Verifying A Fiduciary Advisor
In conclusion, for really important decisions, would you prefer to work with someone interested in selling you financial products or a fee-only financial advisor interested in the outcome of their advice? You can choose to work with a fiduciary, and if it’s all times (fee-only financial advisor) or just sometimes (fee-based financial advisor).
If you think getting non-biased financial and/or investment management advice is important, consider a fee-only financial advisor. For life and family-impacting decisions…why risk it?
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