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What Exactly Is a Fiduciary? And Where Can I Find One? - YouTube
Channel: Turning Point Wealth Management of Raymond James
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- Hi, I'm Lee.
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- And I'm Marsha.
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- And we're Turning
Point Wealth Management
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of Raymond James.
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And today we want to talk about
a term that's been getting
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a lot of attention lately,
and that term is fiduciary.
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So let's answer three
questions that we get a lot
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to get to the heart of this issue.
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First is, what is a fiduciary?
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Second, why is this important?
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And third, who are these
fiduciaries and how do I find one?
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- So let's start with what is a fiduciary?
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We'll use the general definition which is,
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fiduciaries are someone who hold a legal
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and ethical relationship of
trust with one or more parties.
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- Now, let's get specific
on how this applies
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to financial advice.
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I like the definition from the
Certified Financial Planners
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Code of Ethics which states,
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"At all times when providing
financial advice to a client,
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a CFP professional must act as a fiduciary
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and therefore act in the
best interest of the client."
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- Hard to believe it, but
there've been many instances
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of when that hasn't happened.
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- Crazy, right?
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Which leads us to our second question.
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Why is this important?
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Well, it's important
because being a fiduciary
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is actually a choice not a requirement,
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and not every financial advisor
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chooses to become a fiduciary.
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So that means you could wind
up trusting someone for advice
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on your important financial decisions
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that isn't legally required
to act in your best interest.
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So rather than telling
you stories that are kind
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of the horror stories of
how this could go wrong,
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I think we can all imagine
some of the more common ways
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that it might not work out,
let's tell a story of how
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it should work when
somebody really is acting
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in your best interests.
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- Okay, so let's say you
find yourself in a situation
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where unfortunately your
last surviving parent
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has passed away and you are
responsible for an estate
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of several million
dollars and your siblings
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are counting on you.
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So a fiduciary before
making any recommendations
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of what you should do or
selling you something,
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should have a process.
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And that process should
be to understand the goals
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and objectives of you and your siblings.
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So it should start with asking questions
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about several important factors.
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For example, should ask
about risk, cashflow needs,
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past experiences in investing,
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and then they can make
recommendations that are there
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to serve you and your beneficiaries,
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and they're doing it in
everyone's best interest.
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- Yes, so what Marsha is
really saying there is,
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before anybody can actually
act in your best interest,
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they have to take the time
and effort to understand
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what your best interest is.
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And that's one of the
hallmarks of a fiduciary,
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is they'll go through and find
out what's important to you
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so that they can help you
navigate the options that you have
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for moving towards your goals.
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Now, let's talk about that third question,
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who are fiduciaries?
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Where do we find them?
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- They're elusive.
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- It's surprisingly small percentage
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of all financial advisors out there.
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So one of the easiest
ways to tell if someone
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has the CFP marks like Marsha does,
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as she mentioned earlier, I'm
a candidate four right now,
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that's a sign that they've made the choice
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to operate as a fiduciary.
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We gave you that definition earlier,
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if you are using those
marks, you are operating
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under the Code of Ethics
that says you're a fiduciary.
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Another way to tell kind of
like Marsha told in the story,
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is if they're using
that process to find out
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what is your best interest.
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They'll also, if they're
using an account structure
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where they're charging
a fee on your account
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and not commissions for transactions,
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that will put them in the
category of a fiduciary standard.
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- So let's just sum this all up.
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It's really important when
you're making decisions
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in the financial industry
to work with someone
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who is a fiduciary and has
your best interests at heart.
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- Especially if you're
trusting them to help you
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navigate things that you
don't fully understand,
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that's where it becomes really important.
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So if you have other questions about this,
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we'd love to hear from you.
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Hopefully this video is
helpful to you and as always,
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we'll continue to explore
more turning points next time.
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Thanks for joining us.
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- I'm Marsha.
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- I'm Lee.
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- Thank you.
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- Bye.
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