If You Don’t Know What a Fiduciary Is… NOW Is the Time to Find Out
by Confidence Wealth & Insurance Solutions
Confidence Wealth & Insurance Solutions 2 Comments

Standards Are On The Rise

If you have money and plan on retiring comfortably then it is imperative that you know what a fiduciary is. The number one reason: it can save you big bucks.

And the Labor Department thinks so, too.

 That’s why come April 10 all financial advisors who give retirement advice will be held to a fiduciary standard.1

In a nutshell, this means that your advisor is legally bound to give you advice that’s in YOUR best interest… not theirs.

According to the Labor Department, this new rule will save people $40 billion over the next decade.2

April 10 Rings in a New Era for Advisors… And Clients

Basically, all of those high commissions will have to be forfeited in favor of helping people secure their retirement investments. Many financial advisors will be forced, like it or not, to put their needs – and wallet, after their clients.

That’s why it’s imperative you ask before you give your hard-earned money to someone who isn’t committed to these ethical standards.

“The Big Dogs Must Be The Best”

Don’t assume just because your advisor works for a mega bank (or is associated with one) he or she actually has your best interests at heart. This is a rookie mistake – and one you definitely don’t want to learn the hard way.

There are many small, respectable, top-notch fiduciary firms that score As across the board in performance, customer relationships and ethical standards. 

Keep this in mind when you start looking for an advisor to build a relationship with.

 

Because most people have one shot at getting their retirement right (i.e. they don’t have unlimited funds for expensive mistakes), it’s crucial to ask tough questions before you decide on a financial advisor.

The Department of Labor put together a thorough list of questions they recommend posing to a prospective advisor. You are trusting this person with more than money – but with peace of mind, as well.

Questions to ask a prospective advisor, according to the (Department of Labor)3

  1. Do you consider yourself a fiduciary?
    • If not, why not?
  2. Are you willing to act as a fiduciary with a duty to act solely on my behalf?
  3. Are you willing to disclose to me any conflicts of interest that may interfere with your acting solely on my behalf?
  4. Are you willing to put this commitment in writing?
  5. How are you compensated?
  6. Do you earn fees or commissions based on the number of products that I buy or the size of my investment?
  7. Will you earn a higher fee or other type of compensation if I invest in certain products you recommend or will you receive fees for services related to specific investment products?
  8. Will you provide a list of the fees and commissions you receive either directly from me or from other sources in writing?
  9. Are you a licensed or registered investment adviser?
  10. Are you registered with the State, U.S. Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA), or the Certified Financial Planner Board of Standards, Inc. (CFP Board)?
    • For how long?
  11. What is your experience?
  12. Who supervises you, or, are you a sole practitioner?
    • If a sole practitioner, do you have professional liability insurance?
  13. Have you (or your firm) ever been disciplined?
    • If so, for what?

 

1http://money.usnews.com/money/blogs/the-smarter-mutual-fund-investor/2015/03/19/is-your-financial-advisor-a-fiduciary
2http://money.usnews.com/money/blogs/the-smarter-mutual-fund-investor/articles/2016-04-27/what-will-the-new-fiduciary-rule-mean-for-you
3https://www.dol.gov/sites/default/files/ebsa/about-ebsa/our-activities/resource-center/fact-sheets/fsfiduciaryoutreachconsumers.pdf

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