Fiduciary Matters

Fiduciary Matters

December 18, 2023

In the complicated world of the financial industry, there is a vast array of services, products, and sales pitches that can easily confuse even a well-informed investor. In an effort to help ensure you make the best possible decisions and simplify a complicated subject matter; I am strongly of the opinion that the only financial advisor to work with is one that has fully committed to being your fiduciary.

A fiduciary advisor is obligated to act in the best interest of their client in helping them achieve their financial goals. It seems like this should be a given for any advisor, but I believe there are large portions of the advisory world that does not operate under these standards. Some tell-tale signs that an advisor is not acting in your best interests can be their aggressive attempts to "sell" products to clients. Another example is when an advisor is placing a client in a fund with higher fees when other, less expensive options are available. Although technically an advisor can sell things such as insurance to clients and still be a fiduciary (provided they give disclosures about those conflicts of interest to the client). I think the easiest way to ensure you are working with a fiduciary is to engage in “fee only” relationship with your advisor. In a fee only relationship, if that advisor recommends that you consider something such as life insurance, they should be referring you to someone else to sell you a policy rather than doing it themselves. I also believe the best advisors should help you think through the decision of what type of product you might need, consider costs, options etc.

The bottom line, I think it is obvious everyone should want to work with someone who is looking out for their best interests, especially when it comes to financial services. Be sure to research your advisor thoroughly and ensure you have a good understanding of your relationship, expectations and their business model.