What is a Fiduciary?

June 10, 2024

The term “fiduciary” pertains to an advisor who is legally obligated to act in the interests of their clients. While it might be assumed that all financial advisors prioritize their clients’ interests, this isn’t always the case.

Many advisors adhere to a suitability standard rather than a fiduciary standard. This means they are only mandated to suggest options that are considered suitable for the client, not necessarily aligned with their financial goals.

For instance, a typical advisor might propose an investment that yields them a commission by recommending a potentially better investment with lower returns.

Working with a “true” fiduciary will help ensure that the advisor must provide guidance addressing the clients’ needs over their financial gains.

Key Takeaways:

  • Understanding Fiduciary Duty: It’s crucial for clients to understand the difference between fiduciary advisors and those who follow a suitability standard. A fiduciary advisor is obligated to prioritize the client’s interests above their own.
  • Assessing Advisor Standards: When selecting a financial advisor, it’s important to clarify whether they adhere to a fiduciary standard to help ensure that their advice and recommendations are made with your interests in mind.
  • Conflict of Interest: Non-fiduciary advisors may face conflicts of interest that could influence their recommendations. Knowing the compensation structure of your advisor can provide insights into potential biases in their advice.
  • Choosing the Right Advisor: Opting for a fiduciary advisor can add an extra layer of trust and security, knowing that your financial well-being is the primary concern in all advice and decisions made.
  • Educational Importance: Educating yourself about the different types of financial advisors and their duties can significantly impact your financial planning and the type of advice you receive.

Clients looking to prioritize their financial goals and looking to help ensure that their investments are handled with the utmost care should consider working with fiduciary advisors. This approach assures that their interests are placed first in the advisory relationship.

Explore our wealth management services at Landsberg Bennett Private Wealth Management for personalized financial guidance aligned with fiduciary standards.

Our team of fiduciary advisors prioritizes your interests, ensuring that every recommendation is made with your financial well-being as the top priority. Check out how we can help you manage your finances effectively.

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