What is a Fiduciary?

Fiduciary: a person or organization that acts on behalf of another person or persons, putting their clients’ interests ahead of their own with a responsibility to maintain good faith and trust.

Designing a sound financial plan and implementing strategic wealth management and investment decisions requires extensive knowledge in several areas, including tax consequences, markets, securities, and risk.  Equally important is that the plan is designed for your specific situation.

While hiring a qualified financial planner can put you one step closer to financial freedom, making the wrong decision can have lasting repercussions.

Not all financial advisors are fiduciaries. While most financial advisors will sell investments that are appropriate for their clients, a fiduciary is held to a higher standard of care.  

Working with a fiduciary means that your advisor is bound legally and ethically to act in their client’s best interest and not their own. 

Fiduciary Financial Advisor
Fiduciary Financial Advisor
Fiduciary Financial Advisor

How to determine if an advisor is a fiduciary-

You can start by checking how they are registered:  Typically, an advisor falls into one of the following categories:

  1. Investment Advisor Representative.

These individuals work with an investment advisory firm.  You can find information on the SEC’s advisor search tool: https://adviserinfo.sec.gov/ . If the firm they work for acts as a Registered Investment Advisor (RIA), you will be able to view their Form ADV Part 2A filling online.  These individuals should have a ADV 2B that provides their bio and any disclosures.

  1. Registered Representative

Registered Reps are affiliated with a Broker Dealer who is regulated by FINRA. They can operate under a suitability standard and are compensated by commissions on products they sell clients. You can find information about these brokers on Brokercheck: https://brokercheck.finra.org/.

  1. Dually Registered

Some individuals can be dually registered as an IAR and a licensed broker. Clients should ask how they bill for their services and when they will be acting as a broker vs. advisor.  They should also request information about potential conflicts this presents.

Just ask. Your advisor should be able to give you a direct and clear answer. You should also ask about their fee structure. Remember that a fee-only financial planner will charge a flat fee or a fee based on the percentage of assets they are managing for you. They will not receive commissions based on products they recommend or sell to you.

Choosing the right financial advisor can be difficult, especially if you don’t know what questions to ask. That’s why we have put together the 5 questions we think are most important to ask when hiring a financial advisor for you. We strive to be transparent with our clients and we are always happy to answer not only the questions on this list, but any others you may have about financial planning and wealth management. 

Speak with a financial advisor today

Schedule a complimentary meeting or phone call below with our team in 

Houston, TX or San Ramon, CA.

    To learn more about Insight Wealth Strategies, call us at (800) 318-7848, email us at [email protected] or Request More Information.