Looking for a financial adviser or a financial planner? An important distinction to learn is whether or not the adviser is a fiduciary.
A fiduciary financial adviser is one who has a legal obligation to act in the client’s best interests.
They will disclose any conflicts of interest that arise and resolve them in the client’s favor as well as avoid using client’s assets in any way for their own benefit.
Compare this to the standard expected of broker-dealers, stockbrokers, and insurance agents, which is only the fulfillment of a suitability obligation. This means that, while they must provide suitable recommendations to their clients, they don’t have to put their clients’ interests before their own.
An investment adviser who is not a fiduciary can make investment decisions that may be in their own best interests, such as earning them higher commissions or other bonuses, so long as the investment is an appropriate one for the client’s situation.
However, those decisions may not be in the best interest of their clients, who, for example, could pay a higher commission or other charge for the investment product.
Finding out whether your prospective financial adviser is a fiduciary or not is an important part of the selection process, but determining which advisers are fiduciaries and which are not is not always clear. Here we offer a few ways to help find an adviser who is also a fiduciary.
How to Find a Fiduciary Financial Advisor
To find a fiduciary financial adviser, we recommend you ask friends and colleagues for recommendations, consult trusted advisers, or use online sources to find fiduciary financial advisers near you. We elaborate on each of these methods below.
Ask a Friend, Family Member, or Colleague
Above all else, we recommend your search for a financial adviser begins with those in your life whom you trust. You may or may not get recommendations for a fiduciary specifically, but you will get honest feedback from someone you trust. Be sure to ask any advisers referred to you if they are fiduciaries.
Check Online Sources
Advisers who are Registered Investment Advisors (RIAs) are regulated by an agency of the US government, the Securities and Exchange Commission (SEC). The SEC has strict rules and regulations governing advisers, and by law RIAs must be fiduciaries and are required to act only in the best interests of their clients. You can use a few online databases to find advisers who are registered as RIAs.
- NAPFA.org (The National Association of Personal Financial Advisors)
According to their site, “The National Association of Personal Financial Advisors (NAPFA) is the country’s leading professional association of Fee-Only financial advisors—highly trained professionals who are committed to working in the best interests of those they serve.” To search the NAPFA database visit napfa.org
- FPA (The Financial Planning Association)
The FPA also has a database of financial planners that you can search according to location and compensation type. Not all planners are fee-only, but you can easily filter the database to highlight fee-only planners. To search the FPA database visit plannersearch.org
About Modera Financial Planners
We are proudly a fee-only, independently-owned financial planning firm that acts as a fiduciary for our clients. We have built our organization to put our customers’ interests first, as evidenced by our fee-only fee structure and fiduciary responsibility.
If you’re interested in our services, please contact us. If you would like to learn more about financial planning, wealth management, and finding a financial adviser, please visit other areas of our education section.