I Keep Seeing These Ads for a Fiduciary Financial Advisor—What’s That?

Have you seen (or heard or read) one of the new Fisher Investments ads on fiduciary advisors? The money management firm is running the advertisements on all kinds of media, so they’re hard to miss.

Those ads are getting out the message that not every financial advisor is a fiduciary. This article explores why that fact is so important.

What Is a Fiduciary?

A fiduciary is someone who has a legal obligation to act in your best interest. Think of your lawyer or your doctor. As their client or patient, you receive advice meant to give you the best possible outcome.

So a fiduciary financial advisor has the same responsibility with your money. They are legally obliged to offer advice to give your finances the best possible outcome.

What’s the Big Deal?

Think of it this way: If you ask a financial advisor for their advice, you’re placing trust in that advisor. But who is the advisor serving—you or someone else?

If it’s not you, they could sell you a certain mutual fund that earns them a bigger commission. Meanwhile, a different investment product would have cost you less in fees or set you up for higher returns. And you didn’t know about it because the advisor didn’t tell you. They didn’t have to.

A fiduciary would have to.

If you just want someone to place investment trades at your direction, you have a more transactional relationship that may not require a fiduciary. But if you rely on an advisor’s advice to make decisions affecting your net worth, you may want to consider a fiduciary.

How Can I Tell Who Is a Fiduciary Advisor?

First, one way you can’t tell is by the professional’s title. Financial advisor, investment manager, wealth advisor, financial planner—these titles don’t tell you anything about the professional’s fiduciary responsibility to you.

The best way to find out if an advisor is a fiduciary is by asking. You should get a definitive answer. Find out if they are full-time fiduciaries or under what circumstances they do and don’t put your best interest first.

You can look at the firm structure too. A Registered Investment Advisor, like our firm, has a fiduciary duty to clients. An RIA must be transparent about conflicts of interest, which its Form ADV (ask for a copy) has to disclose.

You can also ask a potential advisor about their certifications. Certain designations mean the advisor must serve as a fiduciary to clients. Those designations include:

  • CERTIFIED FINANCIAL PLANNER™ (CFP®)

  • Chartered Financial Analyst® (CFA®)

  • Chartered Financial Consultant® (ChFC®)

  • Accredited Investment Fiduciary® (AIF®)

You can also find out about the memberships of the firm or advisor. For example, they must give fiduciary care to clients if they are members of FeeOnlyNetwork.com or the National Association of Personal Financial Advisors (NAPFA).

More Information, Please!

Here are some helpful resources:

You can also read our article on the fiduciary relationship. Our wealth management firm, based in Roseville and Folsom, CA, and Lehi and Logan, UT, provides fiduciary wealth management services. Schedule a complimentary, 15-minute call today to discuss your personal situation.

This material was prepared by Kaleido Inc. from information derived from sources believed to be accurate. This information should not be construed as investment, tax or legal advice.

Parkshore Wealth Management is a family-owned, independent, fee-only Registered Investment Advisor serving the greater Sacramento area with an office in Roseville, CA. We partner with financially responsible individuals and families who are eager to take positive steps that will allow them to use their money to build the life they desire. The firm is led by Harold Anderson, CFP®, and Daniel Andersen, CFP®, both members of NAPFA, the country’s leading professional association of fee-only financial advisors.

Financial PlanningParkshore Wealth ManagementFinancial Advisor, Investment Advice, Suitability, Fiduciary, NAPFA