What is a Fiduciary, and Why are they important?
Investing can be an intimidating venture, especially when you have no experience. That’s why finding an investment advisor with your best interest in mind is so important – and believe it or not, every firm is not the same in their approach. In this article, we will explore the idea of Fiduciary Duty and what to look for in an advisor.
What is a Fiduciary?
Simply put, a fiduciary is an advisor who always operates in the client's best interest. You might be thinking, “isn’t that assumed?” Unfortunately, no. There are various approaches to account service and fee structure, and it is important to know the difference. A fiduciary operates with a fee-based approach to their services, communicating in advance what that fee will be and working by the agreed-upon client goals and objectives, and with the client’s risk tolerance and time horizon in mind. A fee-based advisor can structure their fees in various ways, including a flat fee, a monthly retainer, or an hourly rate, to name a few. Of course, in addition to fee-based advisory services, there is also the non-fee-based method.
Commission-Based vs. Fee-Based
When an advisor is commission-based, there is considerable reason for caution on the client's part. A commission-based advisor doesn’t generally charge a fee to the client; instead, they are paid a commission that comes from accounts opened or financial products they sell, also known as “proprietary products.” When an advisor is paid based on the product they’re selling, it opens up the possibility that they are not selling you the best product for your portfolio. Even if the funds are top-notch, if the funds are from your advisor’s employer, a perceived conflict of interest is inherent.
Why is a Fiduciary Important?
The bottom line is that if you’re entrusting your money to someone, they should have your best interest in mind. Do you want to be invested in a fund with a good performance track record or a fund that benefits your advisor, regardless of performance? A fiduciary is obligated and bound by their fiduciary duty to operate in your best interest. A fee-based structure allows them to manage this way without being swayed by hefty commissions or other incentives.
At Whitaker-Myers Wealth Managers, we believe you should feel confident that your advisor is working for you and your objectives, not against them. Our Chief investment officer, John-Mark Young, expounds on this topic in a recent video from our blog. Our fee-based advisory services come with transparency and an open line of communication so that you can be confident that your money is being taken care of properly.
Wealth Managers has presented information in a fair and balanced manner.
HOW FIDUCIARY ADVISORS WORK FOR YOU
February 1, 2023
Whitaker-Myers Wealth Managers is an SEC-registered investment adviser firm. The information presented is for educational purposes only and intended for a broad audience. The information does not intend to make an offer or solicitation to sell or purchase any specific securities, investments, or investment strategies. Investments involve risk and are not guaranteed. Whitaker-Myers Wealth Managers reasonably believes that this marketing does not include any false or misleading statements or omissions of facts regarding services, investment, or client experience. Whitaker-Myers Wealth Managers has a reasonable belief that the content will not cause an untrue or misleading implication regarding the adviser’s services, investments, or client experiences. Please refer to the firm’s ADV Part 2A for material risks disclosures.
Past performance of specific investment advice should not be relied upon without knowledge of certain circumstances of market events, the nature and timing of the investments, and relevant constraints of the investment. Whitaker-Myers Wealth Managers has presented information in a fair and balanced manner.
Whitaker-Myers Wealth Managers is not giving tax, legal or accounting advice, consult a professional tax or legal representative if needed.
Copyright (c) 2023 Clearnomics, Inc. and Whitaker-Myers Wealth Managers, LTD. All rights reserved. The information contained herein has been obtained from sources believed to be reliable, but is not necessarily complete and its accuracy cannot be guaranteed. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness, or correctness of the information and opinions contained herein. The views and the other information provided are subject to change without notice. All reports posted on or via www.clearnomics.com or any affiliated websites, applications, or services are issued without regard to the specific investment objectives, financial situation, or particular needs of any specific recipient and are not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. Past performance is not necessarily a guide to future results. Company fundamentals and earnings may be mentioned occasionally, but should not be construed as a recommendation to buy, sell, or hold the company's stock. Predictions, forecasts, and estimates for any and all markets should not be construed as recommendations to buy, sell, or hold any security--including mutual funds, futures contracts, and exchange traded funds, or any similar instruments. The text, images, and other materials contained or displayed in this report are proprietary to Clearnomics, Inc. and constitute valuable intellectual property. All unauthorized reproduction or other use of material from Clearnomics, Inc. shall be deemed willful infringement(s) of this copyright and other proprietary and intellectual property rights, including but not limited to, rights of privacy. Clearnomics, Inc. expressly reserves all rights in connection with its intellectual property, including without limitation the right to block the transfer of its products and services and/or to track usage thereof, through electronic tracking technology, and all other lawful means, now known or hereafter devised. Clearnomics, Inc. reserves the right, without further notice, to pursue to the fullest extent allowed by the law any and all criminal and civil remedies for the violation of its rights.