If you are planning on hiring a financial advisor to improve your finances, you’ll need to learn the meaning of one word: fiduciary.
A fiduciary is legally bound to act in your best interest over their own. Those advisors who aren’t working to the fiduciary standard are only accountable to a suitability standard, which means that their advice must be apt for your financial situation.
The word is a key financial term, yet most Americans don’t know what it is, nor are they familiar with it.
It is a fact that most financial advisors of today don’t work to the fiduciary standard. If you are shelling out money to get financial counsel, you will want someone who will think about your best interests first and not their own.
A financial advisor is almost always working to the fiduciary standard if they are a registered investment advisor, certified financial planner, or a fee-only advisor.
So be sure you’re getting only the best advice. Ask your prospective financial advisor directly if they work to the fiduciary standard at all times. The phrase “at all times” is important, since there are several fine prints in various dealings. He may be committed to a fiduciary standard in some of his dealings, and not in other transactions. So be sure to ask the question directly.