Fiduciary

As an investment adviser, we are a “fiduciary” to our advisory clients. This means that have have a fundamental obligation to act in the best interests of our clients and to provide investment advice in our clients' best interests. We owe our clients a duty of undivided loyalty and utmost good faith.

How Are Fiduciary Financial Advisors Paid?
Financial advisors may be paid on commission, with fees or through a combination of the two. When you hire a new financial advisor, it’s important to ask if they are a fiduciary and how they make their money. This helps you gauge for yourself any potential conflicts of interest. Advisors are commonly paid in the following ways:

Commission-Only Financial Advisors
Commission-only advisors only make money when they sell investments or a particular financial product. Often, commission-only financial advisors are employed by broker-dealers and are only held to a suitability standard. Make sure a commission-only financial advisor is a fiduciary or that you fully understand the products and fees being sold to you before doing business with them.

Fee-Only Financial Advisors
Fee-only advisors only make money from client fees. These might come as flat or hourly fees or as a percentage of all of the assets they manage for you. They do not earn commissions on investments, nor do they get a fee when you buy or trade securities. Because of this, fee-only financial advisors generally have fewer conflicts of interest than other advisors, and they still must disclose any conflicts they do have. Fee-only financial advisors are almost always fiduciaries.

Fee-Based Financial Advisors
Fee-based advisors may have fees like fee-only financial advisors, but they also may earn money from commissions or referral fees, like commission-only advisors. If you choose a fee-based advisor, you want to make sure they are always acting as a fiduciary. Some fee-based advisors may not act as a fiduciary when they perform certain tasks. It’s important to note that just because an advisor receives a commission for a product, that doesn’t necessarily mean it’s not in your best interest. Certain products, like life insurance, may only be sold with a commission-based model, says Karen Van Voorhis, a certified financial planner and Director of Financial Planning at Daniel J. Galli & Associates in Norwell, Mass.

Many financial advising professionals advocate for people to use fee-based and fee-only advisors. That’s because someone who you are paying a fee to, instead of someone being paid a commission by a company, may prioritize your financial wellness more than someone who will make money regardless of if you return to them in the future.

Choosing a Fiduciary Financial Advisor
To find a fiduciary financial advisor, follow these steps:

Think about your goals. Before researching advisors, establish what your financial goals are. For instance, you may be planning on retiring early, funding your child’s college education or buying a home within the next five years. Some financial advisors specialize in particular areas, so you want to make sure you find an advisor whose experience matches your goals and background.

Meet with the advisor. You need to feel comfortable with your financial advisor, so you should meet with your prospective advisors to ensure you agree with their investing philosophy and that they understand your goals and risk tolerance. Your relationship with your financial advisor is ongoing, so feel free to ask questions and request more information. Make sure you leave any first meeting knowing how your advisor makes money and if they are a fiduciary.

Why Work With A Financial Advisor?
A financial advisor provides advice and guidance to clients regarding investments, insurance and other financial planning matters. They also help clients set financial goals and make plans to achieve those goals. And perhaps most importantly, a financial advisor can help you prevent making emotionally charged decisions to buy or sell investments. Do you need help managing your money? If you’re like many Americans, you might need a hand. According to the National Financial Education Council*, a lack of personal finance knowledge costs the average American $1,300 a year.

Keep in mind that financial advisors provide more than just investment advice. People with complex financial needs may need extra assistance. They could be looking to establish college funds or trusts for their children, navigate aggressive debt payment situations or solve tricky tax problems. Not all types of financial advisors offer the same menu of services, so decide which services you need and let this guide your search.

Find The Right Financial Advisor For You
Ultimately, determining whether a financial advisor is worth your money depends on your unique personal and financial circumstances and finding an advisor who aligns with your goals, listens to your needs, and acts in your best interests. If an advisor does these things and more, they will most likely be a good financial investment.

Suitability
Suitability obligations are critical to ensuring investor protection and promoting fair dealings with customers and ethical sales practices. FINRA Rule 2111 governs general suitability obligations, while certain securities are covered under other rules that may contain additional requirements. FINRA Rule 2111 requires that a firm or associated person have a reasonable basis to believe a recommended transaction or investment strategy involving a security or securities is suitable for the customer. This is based on the information obtained through reasonable diligence of the firm or associated person to ascertain the customer’s investment profile. The rule states that the customer’s investment profile “includes, but is not limited to, the customer’s age, other investments, financial situation and needs, tax status, investment objectives, investment experience, investment time horizon, liquidity needs [and] risk tolerance,” among other information. A broker’s “recommendation,” which is based on the facts and circumstances of a particular case, is the triggering event for application of the rule. Brokers must have a firm understanding of both the product and the customer, according to Rule 2111. The lack of such an understanding itself violates the suitability rule.

Source: Forbes Advisor(https://www.forbes.com/advisor/l/investing-financial-advisor-what-is-fiduciary-duty-zoe/?utm_content=170958600918&utm_term=kwd-489556622392&utm_campaign=21115397644&utm_source=google&utm_medium=cpc&utm_campaign=21115397644&accountid=4925968939&utm_content=170958600918&utm_term=kwd-489556622392&network=g&device=c&placement=&location_physical=9031861&device_model=&creative=720411400514&gad_source=1&gclid=Cj0KCQiAlsy5BhDeARIsABRc6Zu8alnuTRyvpbEdQi6tsLdk4QDxF8lzbPRmqEhvzzk1RvHtZgsfNIwaAhhIEALw_wcB)