The Value of a Fee-Only, Fiduciary Advisor
The Value of a Fee-Only, Fiduciary Advisor
What makes financial advice “good enough”? Well, that depends on if your advisor is working under the fiduciary or the best interest standard. The good news is that as the client, you have the power to decide which standard is the right fit for you.
When meeting with a financial advisor, it’s important to understand their motivations and how they prioritize your best interests. Financial advisors are held to different standards of care: the best interest standard and the fiduciary standard. Under the best interest standard, advisors must recommend investments that are in your best interest but can still disclose conflicts like commissions or bonuses they receive. This can sometimes lead to recommendations that benefit the advisor more than the client.
In contrast, fiduciary advisors are legally required to put your best interest first in all aspects of their work, avoiding conflicts of interest and disclosing any that arise. They must recommend investments that are truly in your best interest, and they do not receive commissions for their advice. This means fiduciary advisors are more likely to recommend lower-cost options, like Fund A in a hypothetical example, as their recommendations are based purely on what’s best for you, not on how much commission they can earn.
Not all financial advisors are fiduciaries, and this distinction is important for clients seeking unbiased advice. A fee-only fiduciary advisor charges either an hourly rate or a percentage of assets under management, ensuring that their compensation is aligned with growing and protecting your portfolio. If you’re unsure whether your advisor is a fiduciary, you can ask direct questions about how they are compensated and whether they are required to prioritize your best interests.
Fiduciary advisors provide a higher level of transparency and care, making them an excellent choice for clients who want objective, conflict-free financial advice. If you’re looking for a fiduciary advisor in Chicago, reaching out to a firm that operates under the fiduciary standard could be a great step toward securing your financial future.
We shared how in our recent article. https://bit.ly/fiduciary_advisor.
