What is a Fiduciary Advisor and Why Does it Matter?
All financial advisors are required to give advice and recommendations that are considered “suitable” to their clients. However, fiduciary advisors are held to an even greater standard. As a fiduciary, they are required by law to not just meet suitability standards, but to above all, place the client’s best interests ahead of their own and even ahead of their employer’s. Before engaging in a partnership with an advisor or firm it is important to do your due diligence to determine if they are registered as a fiduciary standard.
Questions to ask when evaluating a financial advisor:
- Are you subject to a fiduciary standard of care?
- How are you compensated? Is any of your revenue generated based on the types of investments that you recommend?
- Is your firm committed to the fiduciary standard of care? How long has your firm been following this standard?
- Do you or your firm have any potential conflicts of interest in providing financial advice to clients?
One of the easiest ways to determine if a financial advisor is a fiduciary, outside of simply asking, is to note whether or not they have any professional designations. The following designations are governed by different agencies:
Certified Financial Professionals (CFPs) are held to a fiduciary standard by the CFP Board of Standards. CFP fiduciary standards apply to a broad scope of financial planning, including retirement, tax, and insurance advice. This standard is not enforced by a government agency, such as the SEC or DOL.
Chartered Financial Consultants (ChFCs) are held to a fiduciary standard by the American College of Financial Services’ Code of Ethics. The ChFC designation covers the same core curriculum covered by the CFP designation plus additional electives that focus on areas of personal finance.
Accredited Investment Fiduciary (AIF) is a designation issued by the Center for Fiduciary studies. It requires designees not only to be fiduciaries, but also to prove knowledge of fiduciary rules and to engage in ongoing education.
About Strategic
Founded in 1979, Strategic is a leading investment and wealth management firm managing and advising on total client assets of over $2 billion.
Disclosures
Strategic Financial Services, Inc. is registered with the Securities and Exchange Commission (SEC) as an Investment Advisor. The term “registered” signifies compliance with regulatory requirements and does not imply a certain level of skill or training.
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Investment Risks and Portfolio Management.
The discussion of any investments on this website is for illustrative purposes only and provides no guarantee that the advisor will make any investments with the same or similar characteristics as those presented. The investments identified and described herein do not represent all the investments purchased or sold for client accounts. The selection of representative investments to discuss is based on various factors, including recent company news or earnings releases.
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