You hear a lot of complicated terms thrown around when it comes to finances, like imputed interest and implied volatility. It’s hard to know what Wall Street jargon you should attempt to understand to successfully manage your money. We’re going to help you out. One term that is essential to your money and how it is handled is the word fiduciary.
What Is A Fiduciary?
The concept can seem confusing to many, as most people assume that all advisors, whether they’re stockbrokers or financial planners, are required to put you first. But that’s not the reality. The truth is that it is often difficult to determine what information is correct and what is just opinion. It’s hard to know who to trust when every expert says they have your best interests in mind. That’s why it’s important to understand the distinction between different types of advisors’ roles and what it means for you and your money.
Fiduciary financial advisors 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 that may come up. Any advice they give is based on the client’s financial situation and investment goals—not the advisor’s ability to make a profit.
A fiduciary advisor can’t, for example, suggest you buy a security that will provide a kickback for them but not benefit you. They aren’t out to make a commission or sale. Their #1 priority is giving you advice that helps you reach your financial goals.
Choosing a fiduciary financial advisor means that you should not be misled or mistreated. It means you have a professional in your corner rooting you on as you journey toward financial security.
Is My Advisor A Fiduciary?
Before you hire your next financial advisor, 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! A fiduciary advisor should have proof they’ve signed a Fiduciary Oath, which declares an advisor’s commitment to a fiduciary code of ethics. (1) They should also provide you with a copy of their Form ADV Part 2, which discloses their obligations as a fiduciary advisor. (2)
2. How do you get paid?
Financial advisors get paid all types of ways—from flat hourly rates down to a combination of fees and commissions. There’s nothing inherently wrong with any of these payment methods, but many fiduciary advisors are fee-only. This removes any conflicts of interest that may crop up if they were to receive a commission from your investments.
3. What’s your financial planning process like?
A fiduciary advisor asks questions and gets 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.
Do I Need A Fiduciary?
If you want to feel confident and empowered to make the best decisions for yourself and your finances, the answer is yes. Fiduciary advisors are open and transparent and act as your advocate as you navigate your financial journey.
At Sirius Wealth Management, we pride ourselves on being fiduciaries. Whether you’re looking for an advisor for the first time or have been burned by bad financial advice in the past, we’re here to help you create a solid plan that helps you pursue your goals. To get started, call 636-449-4890 or email email@example.com to schedule an appointment.
David Domian has been working in the financial services industry since 1980 and specializes in financial planning with a focus on retirement planning. His planning concentrates on four specific goals: the accumulation of wealth, the reduction of taxes and volatility in retirement, the necessary strategies to deal with the risks of longevity, and the passing of an estate in a private, tax-efficient, and protected manner. David holds designations as a CFP® CERTIFIED FINANCIAL PLANNER™, ChFC® Chartered Financial Consultant, CLU® Chartered Life Underwriter, and AEP® Accredited Estate Planner®.
David has been married to his wife, Sue, for over 41 years, and together they have four children and eight grandchildren. Dave is a big believer in family and still has family dinners almost every Sunday with most of his kids, grandchildren, and even his 97-year-old mother. Dave and Sue have lived in St. Louis all their lives. He enjoys spending time outdoors, especially fishing with his grandchildren; he knows they will only be young for so long and you have to live in the moment. This year will be Dave’s 18th annual cross-country motorcycle trip with three college friends; together they have traveled through over 40 states on these memorable road trips.
Dave and Sue support many charitable organizations, including the MS-Society, Cystic Fibrosis, the Lupus Foundation, St. Louis Men’s Group Against Cancer, and the Mary Culver Home for vision-impaired women, where his mother lives. Their support comes in an unusual way: Dave and Sue donate a BBQ (including a pig roast, cooked, carved, and served on site), which is auctioned off at one of their live events. This popular auction item is a great way for Dave and Sue to have fun and do some good in the community. Dave also serves as a board member on the Estate Planning Council of St. Louis.