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Is Your Financial Advisor a Fiduciary?

Is Your Financial Advisor a Fiduciary?

| July 15, 2021
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It’s easy to find a financial advisor. A quick Google search will provide a multitude of names in your area. The problem is not finding one, but finding the right one, someone you can trust to provide honest advice and help you achieve your goals.

The reality is that no matter what someone calls themself—be it financial advisor, financial planner, wealth manager, or financial consultant—it doesn’t tell the consumer anything about the standard to which they are held. This can be incredibly confusing for many people. When it comes to financial advisors, it’s important not to look for a particular job title but to ask your current or prospective financial advisor whether or not they are held to the fiduciary standard

Terms, Defined

If you’ve ever researched financial advisors, you may have noticed there are many different types of advisors from which to choose. Some of the most common types of financial advisors are brokers, fee-only fiduciaries, and independent financial advisors. It’s important to know the standards each type of advisor is held to as you’re deciding who to hire.

In a nutshell: 

  • Brokers manage your portfolio but also sell financial products such as mutual funds or insurance policies, for which they earn a commission. They are not held to a fiduciary standard.
  • Fee-only fiduciaries may charge a flat fee, or a percentage of your portfolio, but they are always held to a fiduciary standard, in which they are required to act in your best interest.
  • Independent financial advisors have started their own financial firm. Most independent advisors act as fee-only fiduciaries, but some may act as fee-based advisors and sell additional financial products on a commission basis.

More About Fiduciaries

In general terms, a fiduciary is a person or entity who has the power to act for another in situations that require complete trust. When it comes to the financial industry, financial advisors who work for a registered investment advisor firm must always act as a fiduciary for their clients. By law, a fiduciary advisor must be completely transparent and always act in their clients’ best interest. They are also obligated to avoid and disclose any potential conflicts of interest.

Additionally, the ongoing services and investment monitoring they provide also falls under the fiduciary duty. In other words, their job doesn’t end after the initial meeting or purchase. They must regularly review your accounts to help ensure your investments are in your best interest.

There are financial professionals whose services do not fall under the fiduciary standard. This doesn’t mean that they are out to steal your money and can never be trusted—far from it. These financial professionals who register with FINRA are held to a standard known as Regulation Best Interest (Reg BI). This is a step in the right direction, but doesn’t take things as far as the fiduciary standard for Financial Advisors who work for a Registered Investment Advisor firm that registers directly with the Securities and Exchange Commission.  

Why Should I Work With a Fiduciary?

There are several benefits to working with an advisor who serves in a fiduciary capacity. For one, they are open and transparent. Aside from the obvious goal of maximizing value for your money, working with a fiduciary can help give you confidence that your advisor is working in your best interests. They’ll give you their true, professional opinion (even if it’s not the answer you want to hear). This is extremely valuable when you’re facing a big life decision, whether it’s purchasing a second home, transitioning into consulting work, or retiring earlier than anticipated. Reviewing your entire financial picture, an advisor can show you the impact a decision may have on your future and how you can pursue certain goals.

By working with an advisor who holds to the fiduciary standard, your confidence can increase in regards to your financial future. Clients have the power to ask questions and to demand the highest value for the service that advisors are providing. As a Registered Investment Advisor firm , we understand people’s reservations or even negative connotations toward the underlying motivations of some advisors. We want to assure you that you can trust in the fact that our relationship with you is built on integrity and putting your interests above our own.

Comprehensive Coordination

Independent, fiduciary advisors do so much more than just pick your stocks. Working with an experienced financial professional can be a realistic sounding board to help provide you with a litmus test when you have questions or face a big financial decision. They actively coordinate the accumulation, distribution, and transfer of your wealth, as well as between the estate, tax, and financial planning areas of your retirement plan. An advisor who looks at the big picture of your financial life can help you optimize income and mitigate taxes in retirement. 

For example, this type of advisor helps you create a retirement income plan that strategizes when you take your withdrawals and what accounts you take them from first; not to mention, they also design a Social Security strategy that optimizes your benefits, minimizes Medicare confiscation, and addresses long-term care so you can feel confident that you’re on the right track as you pursue your long-term goals. The objective advice of an independent fiduciary advisor can make an incredible impact on your financial situation in retirement. 

Do I Need a Fiduciary?

The answer to this question depends on what you want. If you desire to feel empowered to make the best decisions for yourself and your finances, the answer is a resounding yes. You need an advocate, not a salesperson. 

We at Bridgerland Financial pride ourselves on being fiduciaries and upholding the highest integrity. 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 achieve your goals, using the latest financial techniques, solutions, and one-on-one education and advice from a team with over 20 years of combined experience. To get started, reach out to me to schedule an introductory meeting by scheduling an appointment online or reaching out to us at david.packer@bridgetoretire.com or (435) 535-1630. 

About David

David Packer is founder and financial advisor at Bridgerland Financial, an independently managed financial firm in Utah. With 20 years of industry experience, David serves his clients by helping them bridge the gap between their working years and their retirement. He provides tailored, comprehensive financial plans to his business owner and individual clients so they can retire with confidence. David has a bachelor’s degree in finance and holds the Chartered Retirement Planning Counselor℠ (CRPC®) credential. Outside of the office, David loves to spend time with his wife and five kids and stay involved in his community. He currently serves on the board of directors of the Cache Valley Chamber of Commerce. He and his wife, Melonie, spent years as foster parents and eventually adopted their foster children. David loves playing and watching all kinds of sports, including officiating high school sports, and won’t turn down a good board or card game. Learn more about David by connecting with him on LinkedIn. You can also register for his recent webinar, What We Do & How We Help here.

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