Fuduciary vs financial advisor

No.

IMO most financial advisers and fiduciaries work from a script and spout the conventional wisdom.

I do my own homework and take responsibility for my own mistakes.

If you are smart enough to earn and save you are smart enough to invest.

The exception might be someone that comes into a large sum of money but even then there are plenty of well managed mutual funds to choose from.

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We use a FA (commissioned)-Fudiciary for part of our retirement assets. Some specialized longevity annuities, long-term care insurance, and a small managed account all, obtained thru the FA. The FA now is a fudiciary. According to him, he is still compensated by either structure. He's very successful. A good friend still after 35 years.
 
Fiduciary is a general legal term that refers to "a person or entity to which property, assets, or power have been entrusted for the benefit of another". An attorney has fiduciary responsibility to his client. A corporate board member has a fiduciary duty to the shareholders. My financial advisor has a fiduciary duty to me.
 
Fiduciaries are persons or organizations that act on behalf of others and are required to put the clients’ interests ahead of their own, with a duty to preserve good faith and trust. Fiduciaries are thus legally and ethically bound to act in the other’s best interests.

This differs from a financial advisor who works on commission and who benefits from certain investment strategies.
 
funsearcher! said:
Do you use a fuduciary?
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If you are seeking the advice of a financial advisor, always choose a fiduciary, a fiduciary is a financial advisor that is legally obligated to work in a client’s best interest. A fiduciary is required by law to manage the clients’ assets for their benefit and not for their own. Not all financial advisors are fiduciaries. If a financial advisor is only held to a suitability standard, they must suggest products that are suitable for you, but they can often be more expensive designed to earn the advisor a higher commission, so they are not really working in your best interest.
See my article here on how to choose a financial advisor. Tips on Choosing a Financial Advisor
 
I worked for an independent Certified Financial Planner and learned a lot. He took amazing care of his clients; it was impressive.

When we needed a fiduciary advisor for my MIL, who sold her long-time home for a massive profit, I contacted my ex-boss to get referrals for suitable CFPs for her. He gave us 3 firms - we interviewed them, picked one, and we now use him for our personal portfolio as well.

I managed our investments while we were working. I enjoy investing and financial news, but once we retired, I didn't want to deal with the tax issues on distributions. Our portfolio is managed on a tax-efficient basis, and our CPA is very complimentary of their work.

Using a CFP is part of a holistic approach to estate planning. I enjoy global finance but my spouse does not. He's learned a great deal from me - I've taught him what NOT to do, which is often much more important than thinking one knows what to do - but he simply is not interested in managing a portfolio, and never will be.

We have no children. Our successor trustee and heirs have NO experience in handling an estate, nor in managing eldercare issues. We do our best to keep them apprised of the estate and issues, and they know that we have the necessary financial, tax, and legal firms they can rely upon as resources.

I've worked in various industries but most of it was in different areas of Finance - banking, insurance, financial management. I personally would not use any advisor who was not a fiduciary. I also would not use anyone who had less than 20+ years of experience in investment management.

I will point out, however, that the best financial management firms are not the ones who advertise on TV or offer to buy you a free dinner. The most highly regarded firms, without exception, rely on "soft" advertising; i.e., referrals.

They will often have multi-generational clients. If you do not have your legal documents done, they may turn you down as a client, or make it conditional that you complete all necessary legal documents within six months as a probationary trial.

A good financial management firm expects the clients to actively participate in maintaining the relationship. When major life changes happen, they expect the client to let them know, to discuss whether the change will affect your long-term financial and estate planning.

If your only interest is in growing your savings/investment balances, you can do that yourself. Using a fiduciary financial manager is like using a CPA or estate attorney. You can do it yourself if your needs are simple...but if they are not, then it is often best to use a professional whose job is to know the information that you don't.

Because when it comes down to the IRS, the SEC, and the state courts, it's what you and your heirs DON'T know, that may hurt, and can hurt very seriously.
 

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