By Christopher Price, CFP®, RICP®, ChFC®, C(K)P®
Choosing a financial advisor can be a daunting task, as there are many titles and roles in the world of financial and retirement planning. It can be difficult to determine which advisor is best for you and your needs.
The best way to make an informed decision is to ask your current or prospective financial advisor if they are held to the fiduciary standard. This means that they are required to act in your best interest. A fiduciary is legally obligated to put your interests ahead of their own and must disclose any conflicts of interest.
Making sure that you are working with a fiduciary can give you the peace of mind that your advisor is focused on helping you achieve your financial goals. Let’s learn more about what being a fiduciary means and if it’s a good fit for your financial goals.
What Do These Different Titles Mean?
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.
Here’s the breakdown:
- 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, so they may not always act in your best interest.
- 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.
What Exactly Is a Fiduciary?
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. CERTIFIED FINANCIAL PLANNER™ professionals are also held to this duty when providing financial advice to 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.
What Does it Mean to 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 will give you confidence that your advisor is working in your best interests rather than their own. 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, you can be confident in 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.
A Holistic Approach
Independent, fiduciary advisors do so much more than just pick your stocks. Working with an experienced financial expert 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 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.
Partner With a Fee-Only Fiduciary Advisor in Fort Lauderdale
At Coastal Wealth, a MassMutual Firm, we specialize in working with high-net-worth individuals with money in motion. This could mean transferring assets to the next generation, retiring, exiting (or starting) a business, or managing an inheritance. We provide fee-only fiduciary services in Fort Lauderdale, FL. If you’d like to learn more about working with us, schedule an introductory discovery consultation by calling (954) 625-1531 or emailing [email protected].
Christopher Price is a financial advisor and investment advisor representative at Coastal Wealth, a full-service financial planning firm dedicated to going the extra mile to serve its clients with excellence. With over 10 years of experience, Christopher works with high-net-worth and business owner clients, using an educational approach to guide them through the opportunities and challenges they face so they can pursue their goals with confidence. Christopher is known for building long-lasting relationships with his clients and for providing a safe environment for clients to ask questions, receive honest and understandable answers, and become empowered to make the appropriate financial decisions for their lives. Christopher graduated from Susquehanna University with a bachelor’s degree, double majoring in finance and entrepreneurship. He also holds the CERTIFIED FINANCIAL PLANNER™, Retirement Income Certified Professional® (RICP®), and Chartered Financial Consultant® (ChFC®) professional designations. Christopher’s passion for education has led to him partnering with his community to provide workshops on a variety of financial topics that are designed to help financial literacy and confidence. He also founded a not-for-profit organization called Invest in Knowledge, where he and his team coach the community and local organizations through their financial journeys.
When he’s not working, you can find Christopher exploring his many interests and pursuing his extensive goals, including studying for his pilot’s license, traveling, playing baseball or golf, enjoying the ocean outside his front door, or taking his dog, Ranger, to the dog park. He also loves to donate his time and money to local charities and causes he cares about. To learn more about Christopher, connect with him on LinkedIn.
**The views and opinions expressed are those of Christopher Price. Christopher Price’s views are not necessarily those of MM Investor Services LLC or its affiliates. Christopher Price is a registered representative of and offers securities and investment advisory services through MML Investors Services, LLC. Member SIPC www.SIPC.org. 1000 Corporate Drive, Fort Lauderdale, FL, 33334. (954) 625-1351** CRN202601-3689159