Fiduciary Financial Advisor

Fiduciary Financial Advisor sounds good, but it lacks specificity. Avoid buzz terms and industry jargon. Learn how to find a real fiduciary.

“Googling” Fiduciary Financial Advisor

My world revolves around defining fiduciary standards and processes, but I was confused when I first heard the term Fiduciary Financial Advisor. I had never heard or seen the reference. So, I did what I am guessing most people do; I Googled it and found 16,500,000 results!

The first four results for Fiduciary Financial Advisor were all paid advertisements. As a personal preference, I usually skip the advertisements and look for a definition first.

Interestingly, there was no definition for Fiduciary Financial Advisor, but there was one for Fiduciary in an article posted on NerdWallet, titled “What Is a Fiduciary, and Why Does It Matter?”

Major Publications

NerdWallet’s definition of a Fiduciary is “An individual who acts in the best interest of a particular person or beneficiary. In the world of financial services, that means fiduciary advisors must only buy and sell investments that are the best fit for their clients.

Fiduciaries have a bond of trust with clients and must avoid conflicts of interest. Working with a fiduciary financial advisor means that they have your best financial interests at heart, but be careful – not all advisors are fiduciaries.”

Another article by U.S.News titled “What is a Fiduciary Financial Advisor?” states, “…within the fiduciary category, there are also true fiduciaries and pretend fiduciaries, a distinction that presents even bigger risks to investors.” It goes on to ask the question, “Is there a difference between a Fiduciary and a Financial Advisor?” stating the difference lies in what these terms actually mean.

A financial advisor is a job description, including fiduciary and nonfiduciary advisors. A fiduciary is any professional who is upheld to a fiduciary standard….”

Three Keys Regarding Fiduciary Financial Advisors

The articles mentioned above suggest three critical points.

First, being a fiduciary is a legal precedent that a financial advisor may or may not be required to follow. It is also essential to add that fiduciary responsibility levels are different types or levels.

The devil is in the detail, and saying someone is a fiduciary is like saying someone is an excellent professional baseball player without acknowledging if they play Single, Double, Triple-A or are actually playing in the Majors. There will be a dramatic difference between a “really good” Single-A player verse a Major League Baseball star.

Second, the focus seems to be specific to investment management and/or sales. The scope of fiduciary responsibility is most often referred to only in reference to investment sales; however, many financial advisors will use the terms Wholistic Financial Planning or Wealth Management.

These terms imply but do not require a certain level of fiduciary standards. This is like a doctor who does not complete a prudent diagnosis before prescribing a medication to you.

Third, Fiduciary Financial Advisor is a “buzz term” and lacks specificity.

“Fiduciary Financial Advisor” is a Blatant Misrepresentation

The reason for my apparent unawareness of the term Fiduciary Financial Advisor is that it’s a misrepresentation of the relationship between financial advisors and Fiduciary responsibilities.

The term suggests that the financial advisor either advises on fiduciary matters (i.e., an expert of fiduciary issues) or does everything the financial advisor does under fiduciary standards. Still, there is no delineation between what fiduciary standards (i.e., SEC, ERISA, Trust Law, or UPMIFA) or for what specific services the standards apply (i.e., investment sales, investment management, tax advice, or financial advice).

To help you on your financial journey, here are three rules that we think anyone seeking financial advice should consider, especially if you are googling “Fiduciary Financial Advisor.”

Candor Rule.

Fiduciary Financial Advisor is a “buzz term.” It sounds good, but it lacks specificity. Avoid buzz terms and industry jargon. Financial Advisors may try to impress you, but it is their work, not their words, that matters. When you seek out a fiduciary, you are looking for a professional to tell you “how it is,” and they should be doing so honestly and straightforwardly.

The Fiduciary’s job is not to get you the “cheapest” investments or professional services; it is to provide you with the ideal investments and professional services according to your personal situation and the scope of work that you have hired them to perform.

S.E.E.D. Planning Group LLC (S.E.E.D.) is a Registered Investment Advisor (RIA) with the Securities Exchange Commission. S.E.E.D.’s team provides investment fiduciary and financial planning services to clients. Our fees are disclosed, easy to understand, and not predicated on product sales.