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)
NAPFA.org provides a database of financial advisers who have a fee-only structure and who are also fiduciaries. Learn more about why a fee-only structure is important in our article, What is a Fee-Only Financial Planner/Fee-Only vs. Fee-Based Financial Planning. We hold NAPFA in high regard and admire the work it does to educate the public about financial planning and to highlight advisers who commit to their clients with a fee-only structure. Visit napfa.org to check their database.
SEC (U.S. Securities and Exchange Commission) Adviser Database
You can also research potential advisers through the SEC’s adviser search tool. If the adviser is a federally Registered Investment Adviser, and thus a fiduciary, it will have what is called a Form ADV filing available to be viewed online. This document includes a plain-English brochure describing the firm’s services, compensation methods and other matters that you can use to determine fiduciary responsibility.
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.
Modera Wealth Management., LLC is an SEC registered investment adviser with places of business in Massachusetts, New Jersey, Georgia, North Carolina and Florida. SEC registration does not imply any level of skill or training. Modera may only transact business in those states in which it is registered or qualifies for an exemption or exclusion from registration requirements.
For additional information about Modera, including its registration status, fees and services and/or a copy of our Form ADV Disclosure Brochure, please contact us or refer to the Investment Adviser Public Disclosure web site (www.adviserinfo.sec.gov). A full description of the firm’s business operations and service offerings is contained in our Disclosure Brochure which appears as Part 2A of Form ADV. Please read the Disclosure Brochure carefully before you invest or send money.
This article is limited to the dissemination of general information about Modera’s investment advisory and financial planning services that is not suitable for everyone. Nothing herein should be interpreted or construed as investment advice nor as legal, tax or accounting advice nor as personalized financial planning, tax planning or wealth management advice. For legal, tax and accounting-related matters, we recommend you seek the advice of a qualified attorney or accountant. This article is not a substitute for personalized investment or financial planning from Modera. There is no guarantee that the views and opinions expressed herein will come to pass, and the information herein should not be considered a solicitation to engage in a particular investment or financial planning strategy. The statements and opinions expressed in this article are subject to change without notice based on changes in the law and other conditions.