As you move throughout your life, you want to surround yourself with mentors and advisors who are able to provide support specific to the season you’re in currently.
This is true for growing and maintaining a relationship with your financial advisor, who you should trust to give you the best advice and guidance for your specific needs. You can ensure this by hiring a fiduciary.
What is a Fiduciary?
Financial fiduciaries are legally obligated to act in your best interest when helping you make decisions about your money. That’s the way it should be in the first place, right? You would think that all financial advisors would be obligated to do this. However, many advisors who are not fiduciaries will recommend products you don’t really need in order to profit.
Be warned: Not all financial advisors are fiduciaries, so make sure you know what you’re stepping into when you’re ready to talk about finances. The best thing to do? Simply ask which standard they adhere to!
A 2019 Financial Trust Report by Personal Capital found that one in five people didn’t know how their financial advisor is compensated.
“Not all advisors are required to put you first,” Jay Shah, president of Personal Capital, recently told U.S. News. “Only financial advisors who are fiduciaries are required to act in the best interests of their clients.”
We’ll break down three reasons why you need to have a fiduciary financial advisor in your corner — no matter your age.
1. A fiduciary will offer objective advice.
When making choices about your retirement savings, assets, investments, or anything else, a fiduciary will look objectively at your financial picture. This means they will use facts, logic, and data to back up their decisions.
An objective approach is important because it takes into account actual evidence rather than using personal judgment, history, or experience. You want to know that your financial plan is based on your best interests, not how much money your advisor will make.
2. They must disclose conflicts of interest.
A conflict of interest is when someone is in a position to make a decision based on an ulterior motive. Fiduciaries are required to disclose and avoid conflicts of interest.
3. They can help you manage a variety of financial concerns.
Financial fiduciaries are there for you when it comes to any and all questions you may have about your money.
Whether it’s a one-and-done meeting or a long-term relationship, you can come to your fiduciary for things like:
- Fleshing out a plan for major money moves like paying for college, buying your first home, saving for retirement, or estate planning
- Taking a look at your unique financial situation and deciding your next big financial goal
- Working with you to carve out a plan for investing and optimizing your investments for taxes
- Helping you navigate emotionally and physically straining financial emergencies
- Explaining and helping you find the best mortgage and insurance policies
At the end of the day, wouldn’t you rather have someone who you know is on your side, in your lane with you? This is what truly makes fiduciaries stand out among financial advisors.
I wish we lived in a world where we didn’t have to worry about being taken advantage of. But if you make sure to work with a fiduciary, you can ask questions, talk through matters together, and know that your finances are in good hands.
Personal Capital compensates Tori Dunlap (“Author”) for providing the content contained in this blog post. Additionally, in a separate referral arrangement between Author and Personal Capital Corporation (“PCC”), Author is paid $70 and $150 for each person who uses Author’s webpage (www.HerFirst100k.com) to register with Personal Capital and links at least $100,000 in investable assets to Personal Capital’s Free Financial Dashboard. As a result of these arrangements, Author may financially benefit from referring potential clients to Personal Capital and/or be incentivized to present blog content that is favorable to PCC. No fees or other amounts will be charged to investors by Author or Personal Capital as a result of the Referral Arrangement. Investors that are referred to PCC and subsequently subscribe for investment advisory services provided by PCC’s affiliated adviser, Personal Capital Advisors Corporation (“PCAC”) will not pay increased management fees or other similar compensation to Author, PCC or PCAC as a result of this arrangement.