Is A Fiduciary Right For You?

If you’re looking to invest or you already do, then you may have heard of a Fiduciary Advisor

Topics: business

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If you’re looking to invest or you already do, then you may have heard of a Fiduciary Advisor, what what exactly is one and do you need one? What is the difference between a 'fiduciary' advisor and a broker, chartered financial analyst, certified financial planner, and a certified investment management analyst?

 

 

A fiduciary is a person who is given the power to act on behalf of another and put their interests first when it comes to their financial investments. A 'fiduciary' advisor must act in the best interest of their client; they owe their client a duty of loyalty.

 

The Securities and Exchange Commission rules and the Investment Advisors Act of 1940 spell out five primary responsibilities of a fiduciary advisor which are:

 

 

Put the client’s best interest first:

The ‘golden rule’ of fiduciary duty is that a fiduciary owes a sole duty of loyalty to the investor(s) he or she serves. This is in stark contrast to the divided loyalties of a non-fiduciary, such as a broker.

 

 

Act with prudence; that is, with the skill, care, diligence and good judgment of a professional:

Going well beyond the suitability requirement to have sufficient knowledge about an investor’s circumstances, a fiduciary is held to a prudent expert standard and is expected to appropriately apply generally accepted investment theories.

 

 

Do not mislead clients; provide conspicuous, full and fair disclosure of all essential facts:

While this is important in both advisory and transactional relationships, disclosures required for investment advisors are more extensive and are oriented toward factors that may influence a client’s decision to establish a long-term relationship of trust, such as business practices and conflicts of interest.

 

 

Avoid conflicts of interest:

A conflict of interest is a circumstance that makes fulfillment of a fiduciary’s duty of loyalty less reliable. Hence, battles by fiduciaries are to be avoided whenever possible.

 

 

Fully disclose and reasonably manage, in the client’s favor, unavoidable conflicts:

Certain conflicts cannot be avoided, such as when an advisor’s employer provides investment products that may fulfill important unmet investment needs in client accounts.

 

 

How Do You Know If Your Advisor Is A Fiduciary?

The easiest way to find out if your advisor is acting as a fiduciary is to ask them. If they say yes, then you should ask still to see documentation and get it in writing as they shouldn’t have a problem with this, they’re working in your best interest. If they’re not acting as a fiduciary,  they won’t give you paper copies of something that says they are, because it’s a legal standard.

 

 

When Do You Need a Fiduciary Advisor?

The only way you’ll know if you need a Fiduciary Advisor is to think about what services you want from a financial professional as not all investors need fiduciary guidance.

 

 

Where Can You Find A Fiduciary Advisor?

You need to do your homework and get researching. Look for companies or people who are highly regarded in the industry, check out company profiles such as the Asiaciti Trust company profile to really learn about what the company does and how they can help you.

 

The article is for general information purposes only. Nothing in this article is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation that any particular investment, security, transaction or investment strategy is suitable for any specific person. The owner of this website shall not be responsible for any loss that you incur, either directly or indirectly, arising from any investment or decision based on the information provided.

 

 

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