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What Is A Fiduciary? - YouTube
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everyone bill that's been here for money
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evolution calm in today's video I'm
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gonna be helping you to answer the
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question what is a fiduciary more
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specifically I'm gonna be talking about
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some of the differences between a
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fiduciary and a financial adviser so
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this is something that's obviously been
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getting a lot of attention here over the
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last couple of years especially with the
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Department of Labor trying to create
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their definitions for a fiduciary
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standard so hopefully this video gives
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you some some great ammunition to ask
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some of the right questions as you're
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maybe exploring some options for
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yourself and for your portfolios so
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first of all let's talk about a
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definition here so I went out on the
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internet lots of different topics and
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information pertaining to this but one
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definition I found on the internet said
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that only fiduciary advisors are legally
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and ethically required to put your best
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interest before that of their own
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another analogy that I saw that it kind
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of made sense to a degree was imagine
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you're going out to buy a new suit with
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a financial advisor the salesman is only
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required to sell you a suit that fits
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whereas a fiduciary advisor is required
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to not only sell you a suit that fits
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but also that looks good on you so when
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you when you see those kinds of
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definitions and hear that analogy then
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it might become very clear that you need
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to find a fiduciary financial advisor
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one of the reasons that the fiduciary
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has been getting a lot of attention here
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is what we're trying to do I think what
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the industry is trying to do hopefully
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is to eliminate or at least reduce as
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many of the potential conflicts of
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interest that might exist out there one
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of those primary conflicts of interest
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pertains to Commission's
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you know and the idea there behind that
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is that if advisor is getting paid a
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commission to recommend a product or to
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sell you a product that they may be
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doing that more for their own best
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interest for them getting the Commission
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as opposed to doing what is actually
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right for yourself and your portfolio so
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one of the reasons that that I kind of
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take some maybe a little bit of
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disagreement with that that whole
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premise there is again to go back to
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that suit analogy so where you buy your
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suit or where you go shopping for your
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suit may have a very big difference on
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what you end up walking out of that
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store with you know so for example if
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you go to to once to
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they may be fiduciaries they may sell
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you the suit that looks best on you that
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they have available in that store but
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they may have a very limited inventory
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they may not sell all of the brands you
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may go into another store maybe a very
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high-end store and they could sell you a
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suit that looks absolutely phenomenal on
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you but that suit might cost $5,000 and
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you really went in looking for a suit
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that was maybe in the $500 range you
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know so even though that looks the best
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on you there still are some differences
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with that and we see those kinds of
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differences with the financial world as
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well because what we've experienced is
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that even though some of these fiduciary
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advisors may not have an incentive to
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sell different products they may in a
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lot of cases be dealing with a smaller
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investment pool so there's certain
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investments that are only basically
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offered as a commission based product
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some of those are insurance products
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that may not be appropriate for you but
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they may be appropriate for somebody
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else
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things like annuities which may be fit
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into a lot of our clients portfolios and
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things like that you may be missing out
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on some of that advice because that
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particular financial advisor just simply
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doesn't have those those options
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available a lot of firms too will have
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portfolios that are managed primarily by
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their own firms so again you're dealing
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with that smaller investment pool
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another area here too is fees you know
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so the idea with a fiduciary is that
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your chart you're being charged a fee
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for the management of the portfolio it
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doesn't matter what investments they're
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putting into that however the fee can
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vary widely for essentially the same
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thing from one firm to another so you
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may have one firm that's charging one
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percent another firm could be charging
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one and a half or two percent and
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essentially you're getting exactly the
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same thing so again not saying that
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there's a conflict of interest with that
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but again it's something to be aware of
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as you're exploring this fiduciary
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option here the other thing too where
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there are potentially some conflicts of
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interest and again we're charging a fee
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or the fiduciary advisor is charging a
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fee for managing a portfolio and let's
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say you just inherited $200,000 and
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you go to your financial advisor and say
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what do you think I should do with this
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I'm thinking about maybe paying my house
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off or I'm thinking about maybe
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investing that what should I do
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you hope that that financial adviser is
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gonna help you make the best decision
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that's based on your individual
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situation but again even though there's
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not a commission involved there is a
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financial incentive for that financial
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adviser to tell you to bring that money
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to their firm so they can make fees off
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of that portfolio and and so ultimately
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I think whether you're hiring a
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fiduciary or you're working with a
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financial advisor it's still ultimately
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gonna come down to who you're working
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with you know and you want to first and
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foremost find somebody that is going to
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be compatible with you somebody that you
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believe is trustworthy and honest that
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it has a good reputation that maybe also
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deals with similar clients to what your
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situation is you know maybe that's a
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particular company that you work for or
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a particular stage of your life if
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you're planning for retirement or you're
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going through a transitional period with
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your finances you want to find somebody
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that has some knowledge and expertise
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with with your particular situation I
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think that's first and foremost number
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one and then whether you're hiring them
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as a fiduciary or as a financial adviser
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sometimes it might be better to pay a
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commission on something or there's a
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product or something that you want
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access to that's only commission based
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but you want to understand what those
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fees are every financial adviser whether
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a fiduciary or not should do a very good
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job explaining to you what all of those
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fees are and even explaining things that
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are questions that maybe you didn't even
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know to ask and that's going to be
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something very important too so just
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because you didn't ask about a
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particular fee doesn't mean that that
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financial adviser shouldn't talk to you
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about that or shouldn't explain that to
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you so we've chosen to remain just a
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standard financial adviser primarily for
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the reason that we didn't want to limit
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any of the investments or any of the
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opportunities that we might have
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available for our client and so for that
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we have a pretty open architecture of
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there's really very very few investments
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that we don't or can't work with for our
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clients so if the client comes to us and
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maybe they have a need
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or specific product or service we're not
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going to recommend against that simply
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because we don't have that option
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available to them you know we're gonna
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be able to say hey we have that
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available and we like it because of this
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or we have it available but this is why
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we think something else might be better
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for you so we'd like to think that we're
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going to be able to explore and explain
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all of those different options and in
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different investments well to clients so
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there's different levels of fiduciary
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there's different types of financial
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advisors that are out there but again
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you want to find somebody that you like
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and you trust and can help you with your
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situation and you want to make sure that
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they're explaining all of the fees there
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is one last type of fiduciary that I
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want to talk a little bit about and if
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we're talking about eliminating
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conflicts of interest there is something
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called a fee-only financial advisor and
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so this would be somebody that you pay
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and either an upfront or an ongoing
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financial planning fee simply for
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financial planning advice and this
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individual doesn't have any products or
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investments or anything to sell you
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they're just simply looking at your
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financial situation and helping you make
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those decisions and and so that's
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probably one of the cleanest forms of a
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financial advisor of fiduciary out there
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there's a couple issues with that
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potentially one is that many of these
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fee only financial advisors
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you're probably gonna pay at least I
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would say $1,000 or more to get an
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initial plan some of these financial
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advisors that just do fee only I've
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heard charge sometimes 10 or 15
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sometimes I've heard as much as $20,000
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a year just for that financial planning
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advice so it can get a little bit
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expensive and then ultimately you're
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still gonna have to go out and find
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these investments or these products
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somewhere else you know whether they're
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recommending them or telling you to go
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to somebody else or you're gonna have to
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find those investments on your own so
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that's still again it does there's no
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perfect solution for that we do have a
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fee-only financial planning service even
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though we do offer some of these other
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investments and other products out there
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we do have a platform where somebody can
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pay for an initial financial plan it's
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not tied to any specific investment
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recommendations we also have the ability
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to keep that relationship going on an
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ongoing basis where it's a monthly
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subscription based planning service we
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kept it what I think is pretty
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reasonable $99 a month for that ongoing
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financial planning that could be a
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standalone so if you just want that
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financial planning advice or it could be
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in addition to some of the other
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investments that we might be helping you
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manage depending on what kinds of needs
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you have and everything so anyway I hope
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that makes sense I hope that clarifies a
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little bit because again it's one of
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those topics that does seem to have a
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lot of confusion around it and if you'd
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like to talk with us or explore some of
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the opportunities with the financial
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planning that we do I think we've talked
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about this in most of our videos but we
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do a what's called a wealth vision
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comprehensive financial plan it's a
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one-time fee of $299 to put together a
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pretty complete analysis cashflow base
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to look at your situation help you with
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some of your planning goals and then
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once that plan is done then we can start
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to explore what other investments or
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financial planning tools we might have
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that can fit within that financial plan
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so if you're interested in that or
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learning more about it we'll put our
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number up on the screen here we will
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have a link in the description below
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that you can click on sign up for what
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we call a free introductory call with me
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and we can learn a little bit about your
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situation and see if it's something that
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could be right for you but anyway hope
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that's been helpful with that have a
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great day and I'll see you back in one
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of my next videos Thanks
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