What Is A Fiduciary?

When it comes to hiring a financial planner, it can be a challenge finding someone or some company who you trust and will look out for your interests. Virtually every company or independent advisor has a different way of charging for their services. Here at Lyndale Financial, we believe in charging based on net worth. However, there is a more important factor than how someone charges - being a fiduciary.

The first question anyone should ask when interviewing a financial advisor is this, are you a fiduciary to your clients? If this answer is not an immediate and resounding “Yes!”, then I suggest you move on to the next potential advisor.

The Department of Labor has brought this term into the spotlight recently, with the DOL Fiduciary Rule. The rule requires anyone giving investment advice on retirement accounts to be a fiduciary. We are supporters of the rule, as we feel every investor’s advisor should be placing the client’s interest first. However, we feel the rule should be expanded to any and all advice given to clients, not just retirement account advice. If you want to find an advisor that is a fiduciary at all times, continue reading below.

What Is A Fiduciary?

Fiduciary (adj): involving trust, especially with regard to the relationship between a trustee and a beneficiary.

With respect to the financial planning industry, a fiduciary is a professional that is required by law to place the client’s best interest ahead of their own at all times.

A few requirements that a fiduciary advisor must follow include disclosing conflicts of interest to a client at the beginning of working together and as they arise during the working relationship, disclosing how they are compensated, and abiding by a code of ethics.

Who Is A Fiduciary?

Registered Investment Advisors (RIAs) are always held to a fiduciary standard of care. These firms must place their client’s interest ahead of the firm’s at all times. To make sure the advisor you are hiring is a fiduciary, request to see their ADV (a form filed with the SEC) and ask if they are willing to sign a Fiduciary Oath. At Lyndale Financial, our Fiduciary Oath is included with our client contracts.

Where Can You Find A Fiduciary?

Although there are many well intentioned individuals in the financial planning industry, as a potential client, you need to know where you can find a fiduciary. There are a few industry networks that only allow fiduciary advisors and firms to join their association.

XY Planning Network - XYPN members are required to sign a Fiduciary Oath while applying to join the network. XYPN members are focused on working with clients in Generation X & Y, as they have often been neglected by traditional financial services companies. If you are looking for an advisor that works virtually, offers financial planning on an ongoing basis, and is a sworn fiduciary, start here.

National Association of Personal Financial Advisors - NAPFA members are also fee-only fiduciary advisors. Every firm is a Registered Investment Advisor and most often has a physical location in your area.

Garrett Planning Network - Yet another wonderful champion for the fee-only fiduciary movement is Garrett Planning Network. If you are looking for a planner that works on an hourly basis, start here.

Alliance of Comprehensive Planners - At ACP, advisors take a tax-focused approach to providing fee-only fiduciary advice. Search here if you have complex tax needs or prefer working with a tax-focused planner.


Get Next Week’s Post By Email: Subscribe Here.