Your financial needs should always be considered when managing your money. You want to feel confident that the financial advice you receive is best for you, taking into account your unique circumstances, goals, risk tolerance, as well as other factors.
How do you ensure they are looking out for your best interests when working with a financial adviser? This is why you need to pay attention to the word “fiduciary”.
Fiduciary refers to someone who advises others and puts the best interests of that person above their own. A financial planner might be asked to recommend the cheaper fund if they are evaluating two investment options: one that is more costly and has a high commission, or the other that is lower cost and no commission.
However, not all financial advisors must act in the best interest of their clients. CERTIFIED FINATAL PLANNERTM professionals are. In fact, acting as a fiduciary — at all times — when providing financial advice is an obligation of CFP® professionals’ certification.
These are just four more things you need to know about fiduciary advisors in financial services:
1. CFP® professionals are held to the highest standard. Advisors that are not fiduciaries will be held to a lower suitability standard. This requires that the recommendations they make are suitable for the client. Advisors may recommend financial options that are not always in your best interests, such as the high-commission investment product and the more expensive option.
2. Fiduciary financial planners should disclose any conflicts of interest or potential conflicts that might affect their recommendations.
3. Financial planners must disclose their compensation method upfront. This will ensure that you are always aware of whether the financial advisor receives a commission through fees or if any portion of their compensation is tied directly to a product or recommendation.
4. Financial planners who act as fiduciaries may lose their licenses and professional certifications.
You can trust that a CFP® professional will put your interests ahead of their own when providing financial advice, and will provide you with the competent, ethical advice you need to make sense of your finances.
Whether it be planning for retirement, healthcare, education or a special event, CFP® professionals are available to help you reach your personal financial goals. Visit LetsMakeAPlan.org today to find a CFP® professional near you.
