Are you looking to hire a financial professional that can help you with your financial needs? Have you heard of the term “fiduciary”, but are not entirely sure what it means? Partnering with a fiduciary wealth advisor is an important component of a healthy financial strategy because it ensures that your advisor must exercise duties that align with your best interest as the client. Just like your lawyer, doctor and accountant, your wealth advisor should be acting in a manner that benefits you.
Let’s start with what is a fiduciary. A fiduciary is someone who is legally obligated to act in your best interest. A lot of time we hear this term used with attorneys or trustees. Wealth advisors who are fiduciaries work alongside you to achieve your unique financial goals and advocate for you in all decisions. With that in mind, there is a multitude of benefits to partnering with a fiduciary for your financial planning and investment needs. Here are four of the many benefits of hiring a fiduciary as your advisor.
1. Disclose Conflicts of Interest
As mentioned before, a fiduciary wealth advisor is solely interested in helping you as a client. When what is best for the client runs counter to what may benefit the advisor, that is a conflict. Or when an advisor recommends a product that pays them a commission, that is a conflict. All financial professionals must disclose these conflicts of interest in what’s called “Form CRS”. So, that you are fully aware of the potential benefit they may receive from selling you a certain product or service. Fiduciaries are bound by the Fiduciary Standard, in which they must follow the very best course of action, regardless of how it affects them personally or their income.
2. Pay for Advice vs. Commission
When working with a fiduciary, you pay for the advisor’s advice, knowledge, and expertise to navigate your financial goals. Non-fiduciary advisor’s income may be based on the products they sell such as mutual funds, annuities, or insurance. These products may be suitable for you but may not be in your best interest. When you are paying for advice,
3. Simple Payment Structure
The most common way fiduciary advisors are paid is by a flat fee or an AUM (assets under management) percentage fee, which creates 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 questions and communicate the details. If you are leaning toward a non-fiduciary advisor, make sure you request the advisor’s Form CRS, a summary of a broker or financial advisor’s offerings so there are no surprises.
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 are working to meet and exceed your financial goals, not theirs. They are hired to provide expert advice, and their fee structure clearly outlines payment expectations. BerganKDV’s Wealth Management team is comprised of fiduciary advisors who can navigate all areas of your financial life, accumulating wealth, education funding, charitable giving, estate planning and retirement planning. Want to learn more about our advisory services? Schedule an introductory call today with our team.
The views and strategies described may not be suitable for all investors. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for accounting, legal or tax advice.
The views expressed are those of BerganKDV Wealth Management. They are subject to change at any time. These views do not necessarily reflect the opinions of any other firm. Investment advisory services and fee-based planning offered through BerganKDV Wealth Management, an SEC Registered Investment Advisor.