What Is a Fiduciary Financial Advisor?
Partnering with a financial professional helps provide the necessary guidance to reach your long-term financial goals.
What Does a Fiduciary Financial Advisor Do?
A fiduciary is an individual or firm that carries out financial responsibilities on behalf of the client. Their role is legally-bound, and any breach of the term of their contract can lead to legal and financial punishment. They provide a wide variety of wealth management solutions, including:
- Retirement planning
- Estate planning
- Tax planning
Unlike some financial advisors that work to benefit the company that employs them, a fiduciary
is required to act in the client’s best interests at all times.
Why Should Someone Work With a Fiduciary Investment Advisor?
Because fiduciaries are obligated to work on behalf of their clients, and not their company, it provides peace of mind that the solutions will always be catered towards the best interests of the investor.
What Are the Standards of Conduct in a Fiduciary Relationship?
Fiduciary financial advisors serve the needs of clients by adhering to s specific standards of conduct, some of these include:
Fiduciary Duty
In order to act in the best interests of clients, fiduciaries fulfill the following obligations:
- Duty of loyalty: This dictates that a fiduciary financial advisor must place the needs of the client above everything else, including their own and their employer’s.
- Duty of care: A fiduciary investment advisor must act with care and diligence while adhering to the goals and risk tolerance of their clients.
- Duty to follow client instructions: A fiduciary is required to comply with all objectives, policies, and restrictions during the client partnership.
Integrity
The integrity standard describes that a fiduciary financial advisor should act with integrity, honesty, and professionalism. They also may not make any false statements, omit information, or engage in any fraudulent or deceitful activities.
Competence
Fiduciaries are required to provide their services with competence and leverage their relevant knowledge and skills to provide the best solutions. This also includes offering transparent communication and letting clients know the requested services they can’t deliver.
Disclose Conflicts of Interest
While providing their services, a fiduciary advisor must disclose all material conflicts of interest that could impact their relationships with clients. Also, they must implement best practices that help prevent any conflicts from influencing the way they deliver financial advice.
Act Within the Law
Fiduciaries should always act in compliance with the laws, rules, and regulations that govern their services. This also restricts them from intentionally or recklessly participating in any actions that violate these standards.
Tips for Finding Your Fiduciary Investment Advisor
Finding the right fiduciary financial advisor can be challenging, but it’s important to partner with one that best aligns with your long-term goals. Here are some tips that help determine which one is best for you:
Consider Your Goals
The first step is considering your short- and long-term financial goals. Planning for retirement, funding a child’s education, or buying a new home requires different strategies. Knowing what you want out of the relationship helps you find an advisor that offers the ideal specialized services.
Research Advisors
Doing online research for local advisors is helpful, but don’t be afraid to ask friends and relatives about their experiences. Getting honest feedback about their relationship with a financial advisor provides key insight into what you can expect.
Review Form ADVs
All investment firms are required to file the Uniform Application for Investment Advisor Registration (Form ADV) with the SEC. This outlines their services, fees, credentials, and disciplinary history.
Meet Potential Advisors
Taking time to meet potential advisors helps you understand their approach and professional manner. Many firms offer free consultations where you discuss philosophy, goals, and risk tolerance. This is also a good opportunity to ask questions and gather valuable information about their success as a company.
Meet Hobart Wealth’s Fiduciary Financial Advising Team
Want to learn more about the fiduciary investment advisors at Hobart Wealth? Check out our leadership team to learn about their professional background and why they love working with our clients.