Recently, we’ve been noticing the topic of “Fiduciary” more and more across social media platforms. Usually, it is a comment asking whether or not a particular Financial Advisor is a Fiduciary.
Sometimes it’s simply a comment on a post in a search for a Financial Advisor or Planner. The commenter typically recommends you “make sure the advisor you’re meeting with is a Fiduciary.”
While that advice is well-intended, we are finding that most of the general public is not sure what it even means.
In a survey done by Betterment for Business out of over 1,000 employees currently contributing to an employer-sponsored 401(k) plan, just 42 percent of respondents correctly identified the definition of a fiduciary.
There is an obvious need for information in this area.
For our discussion, I think a great place to start is the question “What is a Fiduciary?”
Simply put, a Fiduciary is a financial professional who puts the needs and interests of their clients above their own. They are bound both LEGALLY and ETHICALLY to act in others’ best interests and NEVER their own.
So then how do we know who is and who isn’t a Fiduciary?
This question can be answered pretty easily. Just ask.
Not sure what to ask? Here are some great questions to get you started.
1. “Are you a fiduciary?”
Only financial professionals who are fiduciaries are required by law to act in the best interests of their clients, both on retirement and other investment accounts. Make sure you also ask “Do you work to the fiduciary standard at all times?”
This last part, ‘at all times,’ is important. As the fine print on brokerage forms indicates, the fact that an advisor commits to a fiduciary standard for some of their dealings with you does not hold them to this standard in others.
2. “Do you have an adequate investment in technology?”
Many registered investment advisors haven’t made adequate investments in technology, such as basic financial planning tools*. You should seek an independent advisor who has the software to provide a transparent view of your entire financial life. Otherwise, how would they be able to provide you with holistic financial advice?
3. “How are you compensated?”
It can be tough to find out how an advisor or broker is compensated. Brokers can be incentivized by mutual fund incentives, lending products, and trading commissions. These costs have to be disclosed but are often buried in fine print, but they can add up if you’re not careful. While regulators have made efforts to make fees more transparent, understanding what fees you are being charged can still be a challenge.
So now you may be wondering, “How about Provident Oak Financial?”
The service philosophy at Provident Oak Financial LLC. was built around the fiduciary standard!
“Honoring God through serving others, is our founding principle. We strive to make this the cornerstone of our service to our clients and our community. From our Client Service Model to our interactions with our community; Our goal is to show everyone the care and respect they deserve.”
–Nelson Negron Jr.
President and Wealth Management Advisor
Provident Oak Financial, LLC.
We feel that the fiduciary duty is one of the most revered and powerful aspects of the financial industry and we are proud to honor that standard!
We are also happy to answer questions and/or have that conversation with you, anytime!