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Why Should You Work with a Fiduciary Financial Advisor

Why Should You Work with a Fiduciary Financial Advisor

June 01, 2021
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Throughout your career you have worked hard so that you could enjoy retirement properly without having to worry about money. Unfortunately, the financial advisor you choose to work with can ultimately have a huge impact on whether the money you saved will be enough to reach your financial goals.

Although many advisors have your best interests at heart, there are those in the profession who are paid based on the type of investment product they put your money into. This could lead to ethical conflicts, especially if they aren’t acting in a way that will benefit you.

With a fiduciary financial advisor, you won’t have to worry about that. In essence, a fiduciary is obligated to do whatever is in the best interest of the client to reach their financial goals.

Understanding the Fiduciary - Client Relationship

For the most part, fiduciary advisors have two main duties when managing assets - duty of care and duty of loyalty.

Duty of Care

With the duty of care, fiduciary advisors are obligated to make decisions after reviewing all available information. Your advisor might ask you questions in regard to your risk tolerance, long-term and short-term goals, or retirement plans in order to create the proper investment strategy.

Duty of Loyalty

One of the biggest responsibilities of a fiduciary advisor is to avoid any type of conflict of interest. This can range from personal conflict to an economical conflict. Because of this duty, fiduciary advisors will disclose to clients if they are receiving any type of bonus or commission based on their recommendations.

How Do I Know if My Advisor is a Fiduciary?

Now that we know the importance of a fiduciary advisor, how do you determine if your current advisor is one? The easiest way to find out is to simply ask your current or any potential advisors if they are a fiduciary. Other potential ways to determine if an advisor is a fiduciary include:

  • Specific designations (CFP, ChFC, and AIF all demonstrate that an advisor is a fiduciary)
  • Specific titles (Investment Advisors must adhere to the fiduciary standard)
  • If your advisor doesn’t receive commission from the investment products they sell then they are most likely a fiduciary

What to Expect When Working with a Fiduciary Advisor

Not every financial advisor has to act with their clients’ best interests in mind, but fiduciary advisors do. Here are a few other things fiduciary advisors must do:

  • Avoid and disclose all current or potential conflicts of interest
  • Clearly disclose any fees or commissions that take place in the relationship
  • Ensure all investment advice, to the best of the advisor’s knowledge, is accurate and complete
  • Only make investment recommendations that align with the client’s goals, objectives, and risk tolerance

At The JL Smith Group we believe in providing Fiduciary Services to all our clients and keep your best interests top of mind in all of our decisions. To schedule your free complimentary consultation with one of our trusted advisors reach out to us today at 440-934-9181 or email us at info@jlsmithgroup.com.