Are you looking to hire a financial professional to help with your financial needs? Have you heard the term “fiduciary” but you’re not entirely sure what it means? Partnering with a fiduciary wealth advisor is an important component of a healthy financial strategy, because it ensures your advisor must exercise duties that align with your best interests at all times. Just like your lawyer, doctor and accountant, your wealth advisor should be acting in a manner that benefits you.
A fiduciary is someone who is legally obligated to act in your best interests. Many times we hear this term used for attorneys or trustees. Wealth advisors who are fiduciaries work alongside you to help you toward achieving your unique financial goals and advocate for you in all decisions. With that in mind, there are a multitude of benefits to partnering with a fiduciary for your financial planning and investment needs.
Here are three of the many benefits of hiring a fiduciary as your advisor.
1. Conflicts of Interest Are Disclosed
As mentioned before, a fiduciary wealth advisor is solely interested in helping you as a client. When what’s best for the client runs counter to what may benefit the advisor, that’s a conflict. When an advisor recommends a product that pays them a commission, that’s a conflict. All financial professionals must disclose these conflicts of interest in what’s called “Form CRS” and “Form ADV” so that you’re fully aware of the potential benefit they may receive from selling you a certain product or service. Fiduciaries are bound by the fiduciary standard, which means they must follow the very best course of action regardless of how it affects them or their income.
2. You Pay for Advice (Not Commissions)
When working with a fiduciary, you pay for the advisor’s advice, knowledge and expertise to navigate your financial goals. Meanwhile, a non-fiduciary advisor’s income may be based on the products they sell (such as mutual funds, annuities and insurance). These products may be suitable for you, but commissions do pose a conflict of interest.
3. You Enjoy a Simple Payment Structure
One of the most common ways fiduciary advisors are paid is by a flat fee or an AUM (assets under management) percentage fee, creating less confusion when it comes to payment structure. When selecting an advisor, one of the most important factors is transparency. You want your prospective advisor to comfortably answer your compensation-based questions.
When selecting a wealth advisor, it’s strongly encouraged to find one that fits your specific goals and needs. Fiduciaries earn their recognition as a fiduciary with the notion that they’re working to meet and
exceed your financial goals, not theirs. They’re hired to provide their expertise, and their fee structure clearly outlines payment expectations.
Creative Planning’s fiduciary advisors can navigate all areas of your financial life — wealth accumulation, education funding, charitable giving, estate planning, retirement planning and more! Start by requesting a meeting.
