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What is a Fiduciary Financial Advisor - YouTube
Channel: ACap Advisors & Accountants
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Hi everyone I'm Ara Oghoorian with ACap
Advisors & Accountants and welcome to
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another edition of the ACap ReCap
where we go behind the blog and answer
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some of the frequently asked questions
we get from you and today we're going to
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talk about
what is a fiduciary advisor we're also
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going to discuss
how you know if your financial advisor
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is a fiduciary
and how a fiduciary financial advisor
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gets paid
and most importantly how to find a
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fiduciary financial advisor
but before we begin please remember to
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subscribe
like and share our videos and if there's
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something that you want to see
please remember to comment below or send
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us a message
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So what is a fiduciary financial advisor?
A fiduciary financial advisor is someone
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who's independent
and always puts your interests ahead of
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their own.
According to Webster's dictionary a
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fiduciary is someone who
is held or founded on trust or
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confidence.
A fiduciary financial advisor is held to
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a fiduciary duty
what that means is they have a duty of
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care, loyalty, good faith, confidence, prudence, and disclosure.
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All of these combined
means that a fiduciary financial advisor
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will work hard to put your interests
first
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and ahead of their own. It also means
that they will avoid any conflicts of
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interest.
So this brings up the question should
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your financial advisor be a fiduciary
and the answer is a resounding YES!!!!!
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How do you know if your financial advisor is
a fiduciary financial advisor
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simply ask them. Ask them to sign a
fiduciary oath
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and if you need a copy of a fiduciary
oath please look below and you can get a
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sample of one
but ask them to sign the fiduciary oath
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so that way you know
they're always working for your best
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interest
Another example of a fiduciary financial
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advisor is someone who is independent
they may either have their own firm or
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they work for a firm that's not
connected with any bank or an insurance
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company
that way you know they're truly working
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independently and in your best interest.
Another way you can tell if a financial
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advisor is a fiduciary is if they are
Fee-Only
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Fee-Only financial advisors are
fiduciary by nature
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and if you want to search for the only
financial advisor or fiduciary
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you can do so by going on the SEC.gov
website the securities and exchange
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commission website
the link is below and you can search for
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an advisor.
Through that search you can find out a
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lot about that particular advisor you
can find out
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how their compensation structure is, what their affiliations are,
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but most importantly you can find out if
there have been any complaints
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filed against that advisor so that way
you can be aware ahead of time.
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So how does a fiduciary financial
advisor get paid?
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Well first off, if you're looking for any
kind of professional whether it's a
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financial advisor or anyone else
you want to make sure that that person
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is unbiased and independent and always
working for your best interest.
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If they're getting paid by you and
someone else, obviously their advice is
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going to be tainted in some way
so with that being said there are three
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types of ways that
financial advisors get paid. There's one
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where it's a commission based model
in that situation someone would be
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selling you a product
and they're going to get some sort of
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commission based on that a common
feature is for example insurance life
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insurance annuities
those types of advisors usually are paid
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by the insurance company
so there's an inherent conflict of
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interest within that compensation
structure.
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The other way that a financial advisor
can get paid is through a combination of
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fees
and a commission so following with the
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same example let's assume someone's
selling life insurance and they get
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commissions from that life insurance or
annuity
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and you are the one that's paying them
as well then
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they're getting compensated by both ends
and they may not be as fully independent
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and unbiased
as you want them to be. Now the gold
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standard of compensation is a fee only
model
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in the fee only model you are the only
one that pays the advisor no one else
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that way you know that that advisor is
working for your best interest in your
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best interest only
they're not tainted or biased by any
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compensation
schedule or any payout schedule by some
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insurance or product
they're always working for your needs
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and making sure that your needs are met
The cost of a financial advisor
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typically starts at 1%
of AUM also known as Assets Under
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Management.
That's essentially how much the advisor
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is managing
on your behalf. Now some advisors also
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some fiduciary advisors also do one-off
assignments so for example they'll do a
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one-time financial plan
or they'll do an investment review or an
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insurance review
in those situations it's a finite
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project
you'll pay them a flat fee and they'll
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do that project based on whatever scope
or engagement that you have with them
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but traditionally financial advisors are
paid based on
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at least Fee-Only financial advisors are
paid based on
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a percentage of assets that they manage
for your behalf. So we talked about
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what is a fiduciary financial advisor we
also talked about how do i know if my
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financial advisor is a fiduciary
and we also talked about how does a
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fiduciary advisor get paid
now we're going to talk about how do you
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find a financial advisor it's a
fiduciary because that's the most
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important part right
so first step is to ask your friends and
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your relatives
because most likely they're working with
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someone and if they like them
you want to get a good referral that's
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probably the best way to get someone
that you know and you trust
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now after you've got that person or
maybe you don't have a referral from a
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friend or a relative
but the second step in that process
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should be making sure that that person
is Fee-Only and that they are a
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fiduciary
make sure it's very important that they
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are not fee based
because fee based goes back to the
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comment we made earlier
that that person can be paid by you and
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they could be compensated by
the investment product or insurance
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product they're selling you
most next make sure that the financial
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advisor
signs a fiduciary oath and if you need a
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copy of a fiduciary oath
you can find one in the link below or
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you can contact us and we can send you
one
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and then lastly do your research you can
either search them online to see if
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they've got good reviews
you can look on the SEC.gov website that we
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mentioned earlier
you can read some of their postings and
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their articles to see if their
investment philosophy and their
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investment strategy is in line with what
you're looking
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for but all of these things combined
will help you make a better informed
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decision on whether or not
the financial advisor is right for you
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and that that financial advisor is
Fee-Only and fiduciary that's always
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going to work in your best interest.
Thank you for joining us for another
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edition of the ACap ReCap where we went
behind the blog and answered some of
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your
most pressing questions and today we
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covered what is a fiduciary financial
advisor
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how you can find a fiduciary financial
advisor and how a fiduciary financial
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advisor is paid.
If there's a topic that we haven't
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covered or something that you want to
hear about
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please let us know in the comments below
or email us ([email protected])
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in the meantime please subscribe like
and share our videos
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among your friends thank you
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