Your money is an extremely important asset — one that you work hard to earn, try your best to spend wisely, and save when you can — it’s not something you should take lightly.
So when it comes to trusting someone else with it… you want to do everything in your power to ensure that person or team is trustworthy, knowledgeable, and working in your best interest.
There are a lot of ways to squander your money and mismanage your finances. But there are also numerous ways to grow and preserve it, too. Having a trusted partner in your corner to help you plan for the future, design a financial life you’re proud of, and achieve your financial goals makes it even easier.
Learn about one of the most important things to look for when you’re shopping for a financial advisor.
What Is a Fiduciary?
Put simply, a fiduciary is a professional who manages another person’s property or money and is legally required to manage it for the owner’s benefit, not the fiduciary’s. Their responsibility to their client’s best interest is both a moral and legal one.
In a financial advisor setting, a fiduciary must:
- Make decisions based on what is best for their client.
- Carefully manage their client’s money responsibly.
- Keep records properly organized.
- Disclose any potential conflicts of interest.
- Assess their client’s risk tolerance and tailor their advice appropriately.
- Keep an open line of communication with their clients.
- Be transparent about any associated fees.
Because fiduciary financial advisors cannot sell products (such as annuities, mutual funds, and insurance) that don’t completely benefit their clients, most of them are also fee-only advisors. By charging a fee for their financial planning services, financial advisors can avoid a conflict of interest because their paycheck doesn’t depend on kickbacks or on selling products.
Fees can be charged based on a percentage of assets under management, flat fees, or hourly rates. Fee-only fiduciaries can offer personalized and ongoing services because they’re not dependent upon selling certain products.
At Five Pine Wealth Management, we ensure we’re meeting with our clients at least once per year to go over your financial goals and progress (though hearing from us monthly or quarterly is more likely). Like bacon and eggs, we believe our fee-only compensation model pairs beautifully with our fiduciary duty to our clients.
Why The Fiduciary Duty Matters
Truthfully, it’s not uncommon for people to be motivated by money — it’s why we work hard at our jobs and constantly work to better ourselves. When a financial advisor has a monetized incentive to sell you a product or service, it can blur the lines between doing what’s best for the client and getting paid.
The fiduciary duty takes financial motivation out of the equation — making it easier for advisors to build trust and confidence with their clients. The duty also supports important principles such as transparency, objectivity, accountability, and honesty — all things you want a financial advisor to have. So while the fiduciary duty isn’t a complete guarantee that your advisor will always be truthful, it does provide a safeguard against misbehavior.
How to Find a Good Fiduciary Financial Advisor
Before your search, it’s important to determine what you’re looking to accomplish with a financial advisor. You might want ongoing, comprehensive financial planning where you’ll receive continuous advice and strategies for your financial goals. Or maybe you want someone who specializes in retirement planning and wealth transfer. You may also just want to engage with a financial advisor to get a couple of important questions answered. Determining your goals first will help you drive your search.
Searching for a fiduciary financial advisor can be made easy by utilizing online search databases such as the National Association of Personal Financial Advisors (NAPFA). This organization ensures that their featured financial advisors are fiduciaries and have a fee-only compensation structure. You can verify an advisor’s fiduciary status using the FINRA’s BrokerCheck database.
You can also ask for personal recommendations from family and friends or look online for reviews. You’ll want to determine if you want a local or virtual advisor (both have their benefits!) — this will help narrow down your search. Remember to ask if they are fiduciaries!
How to Choose a Fiduciary Financial Advisor That Exceeds Your Expectations
Once you have a list of potential fiduciary financial advisors, it’s time to narrow them down. Remember, you want to feel completely comfortable before engaging in this new professional relationship. Most advisors and firms will offer you a free discovery call or initial consultation so you can get to know each other before committing to services.
Here is a list of questions you should ask the potential advisor during your discovery session.
- How do you get paid?
- What certifications and credentials do you have?
- How long have you been in business?
- How many clients do you have?
- How and how often do you communicate with your clients?
- What kind of clients do you typically work with (age, net worth, life status, etc.)
- What kind of continuing education do you engage in?
- What’s your investment philosophy?
- Do you tailor your financial recommendations?
- Can you provide me with client testimonials?
After you find a fiduciary financial planner that will both meet your needs and exceed your expectations, it’s time to get started!
Meet Our Fiduciary Financial Advisors at Five Pine Wealth
If you’re looking for a fiduciary, fee-only financial advisor who works in Spokane, Coeur d’Alene, Boise, Post Falls, Sandpoint, or anywhere in the United States via our virtual services, then the advisors at Five Pine Wealth Management would love to connect with you.
We are fiduciaries by choice and value the customer service and regular review processes that we provide our clients. We offer comprehensive financial planning, investment advice, and tax planning services. Our clients range from individuals in their early 20s who are just starting their careers to high-net-worth individuals preparing for retirement. To learn more about us, give us a call at 877.333.1015 or email us at email@example.com.