Working with money is serious. I don’t see the money, I see the person, the couple, the children or grandchildren behind the face in front of me. They’ve spent 5, 15, 25 years or more, growing their financial nest egg to reach a goal of retirement or to help those loved ones around them. When I look across the table and stare them in the eye, I want them to know that I’m always serving them and their families as an independent fiduciary. In doing so, I find myself and our firm having thousands of conversations every year that are unfortunate, unnecessary even, if they hadn’t been sold high-fee based products from — you guessed it, a brokerage house. So what is a fiduciary financial advisor?
WHAT IS AN INDEPENDENT FIDUCIARY FINANCIAL ADVISOR?
So what is an independent fiduciary? Independent from an investment stand point, means being free to recommend any product, service or strategy that is in the best interest of you — the client. Your big box brokers, are tied to what those companies sell. They may be asked or inclined to offer services that render much higher payouts to the themselves, the firm or both. If you’ve saved $500,000, $1,000,000, or even just $50,000 for retirement, fees and services matter. Realizing that no matter what value your investment portfolio is currently, costs to your portfolio can be significant. Which brings us to our second part of the question — fiduciary.
Fiduciary is a big word that simply means doing what is in the best interest of the client first, as governed by the SEC. Keep these things in mind when meeting with an advisor:
— Who do they work for? Are they independent or tied to a brokerage house?
— Fiduciary? Are they acting in your best interest or merely operating under the suitability standard? The easiest way to tell is just to ask them
— Commission or fee based? Advisors who earn commissions on a sale may be incentivized to sell their own products or the one that pays them better. Ask how they get paid.
— Transparency- fiduciaries must discuss decisions and all relevant information/facts with the client
It’s not enough to understand the definition, you must understand what an independent fiduciary financial planning firm does differently to help you. Those differences become clear when you learn the following things to look for.
FIDUCIARY ADVISORS ARE TRANSPARENT
Brokerage houses love to focus on product. You might hear sensational statements at a presentation from them that guarantees 10%, 15% or even 20% bonuses. Often they’ve chosen a fictitious ‘1 day only we can meet with you for this deal’ invitation as well. Buy this you get that. They are focused on selling products to you. Call me if you have any questions, but don’t expect me to contact you for years is often the mentality.
That’s high pressure sales. That’s not people focused. That’s not what you should ever experience.
When working with a firm like ours, the discussion always starts with you. Your goals, your family and where you came from to get where you currently are. We are laser focused on retirement planning. We work with those in or near retirement, who are in the distribution phase of their life. We build plans we don’t sell products. We help thousands of families all over the country in retirement with a focus on safety.
To bring the experience full circle, I’ll spend the end of this post explaining how your investments can take a major hit if you choose the wrong person to oversee your portfolio because brokerage houses aren’t the ones who end up broke from the relationship. Here’s the real price you pay!
THE REAL PRICE YOU PAY
When brokers take control of your assets, often the high-fee products they recommend leave you with the expense and many times you don’t even realize it. Products like variable annuities or mutual funds contain some of the highest fees passed on to the client in the industry. You may spend 10-15 years with a broker who continually has you in these high fee products that weigh down the growth of your investment portfolio. Fees are typically only disclosed in fine print that is mailed to you once-a-year in a large document where it can easily be missed – it’s called a prospectus.
An extra 1 or 2% in fees each year may seem small at first. Over a 10-year period, you could be getting charged additional fees that robbed you of your assets and lined the brokerage houses pockets with a huge payday depending on the amount of assets you have invested with them. That money could have been better spent on a family vacation, given to a grandchild for college or used for your future medical bills.
If you’re like so many people out there right now living some version of this situation. It’s time to get a second opinion from an Independent Fiduciary Financial Advisor who can give you a clear assessment of your portfolio. Find out what the true fee cost you are paying is. Find out if there is a better option, so you can be confident in your financial future, knowing your best interests will always be the focus.
