Why You Should Work with a Fiduciary Financial Planner

Never has one word made such a distinction – fiduciary. Anyone can hang a shingle and refer to oneself as a “financial planner” or “financial advisor” and talk to people about money and investing. There is no training required to be called a financial advisor. However, to hold oneself out as a “fiduciary” means that the planner or advisor is always acting in the client’s best interest 100% of the time.

Fee-Only vs Fee-Based Advisors

At Wiser Wealth Management, we are fee-only, fiduciary advisors. This brings up another important distinction, fee-only versus fee-based. Which advisor is inclined to be more impartial? An advisor who sells nothing and has no conflicts of interest when it comes to product selection or an advisor who just happens to sell some insurance products which just happen to earn him/her a commission? A fee-only advisor is unfettered with no requirements to “sell” anything to clients. Fee-only advisors deliver advice designed to deliver the best outcomes for clients.

How do I know if my financial advisor is a fiduciary?

One of the easiest ways to ascertain whether your advisor is a fiduciary is to ask them how they are compensated. Some “fee-based” advisors are obviously not acting as fiduciaries when they are selling products. If any element of compensation is derived from commission or product sales, there is a conflict of interest. Some advisors derive their compensation from fees embedded in commissions earned through mutual fund sales loads or 12(b)(1) fees which aren’t already transparent or easily identified on a statement. Also, ask your advisor about the business partners with whom they deal. Make sure no remuneration is received from any referrals s/he makes to another professional such as a CPA, estate attorney, or insurance broker which would pose a conflict of interest.

What is a fiduciary financial planner’s main job?

A fiduciary financial planner’s main job is to provide financial advice and guidance for the client’s long-term benefit. Make sure your planner is a true fiduciary and free of any conflicts which would lead to less than impartial advice.

Have more questions? Contact Us

Missie Beach, CFP®, CDFA®
Senior Financial Advisor

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By Published On: December 28, 2022

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