A financial advisor can help you set a personal budget, plan for the future, and set financial goals. While there are many kinds of financial advisors — from robo-advisors to seasoned wealth managers — not all of these professionals are fiduciaries. Learn more about the responsibilities of financial planners’ fiduciary duty and the benefits of choosing a certified fiduciary advisor in this post from Moneta.
What Is a Fiduciary?
Fiduciary duty is the legal responsibility to put another party’s best interests before your own. A commonly cited example is the attorney-client relationship: a lawyer has a fiduciary duty to act in a way that puts their client’s interests first.
In the financial world, financial advisors that are fiduciaries must act in your best interest. They cannot, for example, recommend an investing strategy that would benefit them over you. A fiduciary financial advisor must adhere to certain practices, including:
- Minimizing conflicts of interest and disclosing any potential conflicts of interest to their clients
- Being transparent regarding their fees, compensation structure, and practices
- Providing accurate and thorough advice
A breach of fiduciary duty occurs when a professional does not act in good faith — such as making an unauthorized trade or misrepresenting information about a certain stock or fund. When a financial planner violates their fiduciary duty, they can face legal consequences.
Financial advisors who are registered with the U.S. Securities and Exchange Commission (SEC) must adhere to the standards of fiduciary duty. This status allows them to claim the title of Registered Investment Advisor (RIA). If your wealth manager is an RIA, you can trust that they’re a fiduciary.
The Certified Financial Planner Board of Standards, Inc. (CFP Board) also holds its members to this obligation. All certified financial planners (CFPs) are fiduciaries and must meet the educational and ethical standards set by their board.
Benefits of Working with a Certified Fiduciary Advisor
Stockbrokers, wealth managers, and other financial professionals are not necessarily fiduciaries. If you’re considering working with a financial advisor, make sure you ask if they uphold this obligation. There are many advantages to choosing a fiduciary advisor, such as:
- Peace of mind: You can be confident that the advisor managing your wealth has your best interests at heart.
- Disclosure of conflicts of interest: Fiduciaries must put their clients first and disclose any potential conflicts of interest.
- Transparency: Many fiduciaries are fee-only advisors, meaning they won’t receive outside commissions. They are typically paid via a monthly retainer fee, an hourly rate, or as a percentage of your total assets under management (AUM). They’re also required to give you clear and comprehensive advice, providing all the information relevant to helping you make decisions about your money.
- Less outside influence: Some financial advisors earn a commission when they sell you on certain investments or investing services. And they may push you to choose a product that’s not aligned with your goals. Fiduciaries, in contrast, have to seek the best possible terms for their clients.
Get Fee-Only Fiduciary Wealth Management From Moneta
When it comes to your financial future, you need a trusted professional who will give you sound advice. That’s why it’s so important to partner with a team of fiduciary investment advisors. At Moneta, we are fiduciaries with extensive experience in wealth management. A Registered Investment Advisor firm, Moneta offers a wide range of services, including:
- Estate and trust planning
- Investment advising
- Family office services
As fee-only fiduciary advisors, we are committed to providing the highest level of service and a transparent compensation structure. To learn more about our fiduciary wealth management services, contact us.
© 2022 Moneta Group Investment Advisors, LLC. All rights reserved. Moneta Group Investment Advisors, LLC is an SEC registered investment advisor and wholly owned subsidiary of Moneta Group, LLC. Registration as an investment advisor does not imply a certain level of skill or training. Moneta is a service mark owned by Moneta Group, LLC. These articles do not individually or collectively constitute an offer to sell or buy securities, nor does any statement contained herein represent any specific recommendation.
