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What does it mean to be a “true fiduciary” and why should it matter to you?

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Understanding of what a fiduciary financial advisor is – past and present.

A new client meeting five or ten years ago looked like this. I’d be so excited to share with them that I was a fiduciary. I’d explain that I was a true fiduciary and I would always put their interests first. I would explain that very few financial advisors were fiduciaries and that most (90% or more) could give advice that wasn’t in their best interest. I would then sit back and wait for them to have an epiphany that working with a fiduciary financial advisor was superior to working with a non-fiduciary. Often though, the aha moment never came. My enthusiasm for all things fiduciary usually fell flat. Why?

Ten years ago, and even just five years ago, most people had never heard of “fiduciary financial advisor”. They assumed (I would have to if I wasn’t in the field!) that all financial advisors would, of course, have to provide financial advice that was in the best interest of the client. There wasn’t enough public education or discussion about how the industry really worked, so I think sometimes prospective clients were skeptical of what I was saying. I could see it in their faces – “Am I to believe that I can hire an advisor and that they can give me advice that is not in my best interests?”

Fast forward to today and everything has changed. Now, often one of the first questions I get from a prospective client is if I am a fiduciary. It is amazing! The public has a much greater understanding of what a fiduciary is and why it makes sense to work with an advisor that always has to put their interests first and foremost. The days of touting the benefits of working with a fiduciary and getting a blank stare back are gone. However, there is still work to be done. There is a difference between a fiduciary and what I call a “true fiduciary.”

What’s the difference between being a part-time and full-time fiduciary?

It is possible for a financial advisor to be a part-time fiduciary and still call themselves a fiduciary. Many financial advisors are what is called “dually registered.” This just means that sometimes they act as a fiduciary and have to put your interests ahead of their own and sometimes they don’t and can put their interests ahead of yours. The problem is that you never know which hat they are wearing. Were they wearing their fiduciary hat when they gave you that recommendation or did they have their non-fiduciary hat on? I think these dually-registered firms and advisors do more harm than those advisors who never claim to be fiduciaries. Why?

At least you know what you’re getting with an advisor who doesn’t claim to have your best interests at heart. There is no guessing. The part-time fiduciary gets to market themselves as being a fiduciary but then when it serves them, they can take their fiduciary hat off. That’s not right. In fact, there is research that suggests these part-time fiduciaries are rife with conflicts of interest – they charge more than full-time true fiduciaries and are more likely to be the subject of disciplinary actions by securities regulators.

We are True Fiduciary financial planners. No exceptions.

As a True Fiduciary, I am a full-time fiduciary. This means the retirement and financial advice I provide always has to be in your best interest – 100% of the time; no exceptions. When you work with a True Fiduciary, you never have to worry that the financial advice you are getting is tainted and designed to benefit the advisor. A True Fiduciary is a partner that will help you make the decisions that are best for you.

Please download our fiduciary oath, and learn more about our firm. Feel free to contact us with any questions.

Fiduciary Financial Planner Irvine

 

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