“Fiduciary” and “fiduciary duty” are key terms widely used within legal and personal finance realms. If you’ve considered the benefit of enlisting professional help for managing your finances or property, chances are you’ve been advised to choose a fiduciary advisor.
You may find yourself asking, what defines a fiduciary advisor and what are their responsibilities? Is a fiduciary the right fit for me?
Here’s a closer look at fiduciaries:
A fiduciary is an individual or organization ethically and legally obliged to act in someone else’s best interest, prioritizing their needs over their own. This relationship is designed to prevent conflicts of interest, ensuring the fiduciary acts solely for the benefit of those they represent. Common fiduciary examples include relationships between doctors and patients, attorneys and clients, and fiduciary financial advisors and their clients.
Understanding Fiduciary Advisors:
Financial advisors in the U.S. are governed by different regulations, with some following a suitability standard overseen by the Financial Industry Regulatory Authority (FINRA). These advisors must ensure their investment recommendations fit the client’s specific situation and disclose any potential conflicts of interest. On the other hand, Registered Investment Advisors (RIAs), like RoseMark Advisors, are always expected to act as fiduciaries, placing their clients’ interests above their own.
The Importance of Fiduciary Duty:
Fiduciary duty entails a legal obligation to act in the best interest of another party, whether an individual, a corporation, or a group, like a workplace savings plan and it’s participants. For financial advisors, especially RIAs, this means prioritizing clients’ financial interests, including recommending lower-cost investment options when possible.
Fiduciary Roles and Responsibilities:
Not all fiduciaries are financial advisors. Fiduciary duties extend across various relationships, including trustees and beneficiaries, board members and shareholders, executors and legatees, guardians and wards, attorneys and clients, and principals and agents.
The Value of Working with a Fiduciary Financial Advisor:
Engaging with a fiduciary financial advisor ensures your financial well-being is always the top priority. This peace of mind comes from knowing your advisor is committed to acting in your best interest across all aspects of your financial picture and holistic financial plan.
Fiduciary Advisor Compensation:
Fiduciary advisors typically earn through client fees, avoiding commissions or financial incentives from third-party firms. These fees might be asset-based, hourly, project-specific, or based on a subscription model.
Cost of a Fiduciary Financial Advisor:
Fees for registered investment advisors usually hover around 1.00% of managed assets. This varies per firm, but the transparency of expected fees is a vital component to a trusting relationship between you and your fiduciary.
Opting for a fiduciary financial advisor can significantly impact your financial strategy, ensuring your investments and financial planning align with your best interests to provide you with confidence, simplicity, and success in your financial future.
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