Hiring a financial advisor often comes with the expectation that they’ll prioritize your best interests, but not all advisors are legally required to do so. Only fiduciary advisors are bound by law to put your needs ahead of their own, providing guidance you can trust because they’re held to the highest ethical standards.
This article takes a closer look at the value fiduciary advisors bring and how they can help you pursue your long-term financial goals.
Your Advisor’s Motives Stay Clear and Honest
One of the main advantages of dealing with fiduciary advisors is that their sole interest is always what’s best for you as a client—even if it does not always work in their favor.
Through documents like Form CRS or ADV, fiduciary advisors are legally required to reveal any possible conflicts, such as financial ties with particular investments. This informs you of the precise ways they could profit from their recommendations.
Non-fiduciaries, however, aren’t held to this higher standard. They’re not legally required to recommend the best course of action for you, and they might leave you unaware of hidden incentives.
You Get a Transparent, Straightforward Payment Structure
Working with fiduciary advisors often comes with a straightforward payment structure. For instance, they might charge you:
- A percentage of the total assets they manage for you
- An hourly fee for specific services or projects, such as financial planning or consulting
- A predetermined flat fee for services like curating a financial plan or performing a one-time consultation
These setups can simplify what commission-based models often complicate, so you’re not left wondering if the advice serves your needs or the advisor’s potential earnings.
Transparency is key when you’re choosing your advisor—after all, your financial future, personal well-being, and long-term stability depend on it. It’s important to know how the advisor is compensated and to get straightforward, honest answers whenever you ask about their fees.
You Invest in Knowledge and Experience With Fiduciary Advisors
Among the key benefits that often go under the radar when you’re working with fiduciary advisors is that you’re essentially paying for their knowledge and skill to guide your financial decisions. Their income comes directly from you, and they typically receive little from third parties. Since they are not earning commissions from selling financial products like annuities or mutual funds, they can charge a clear, up-front fee for their advice.
With such a structure, you can feel confident knowing their recommendations serve your long-term plans, your best interests, and your financial future (not their paycheck).
While non-fiduciary advisors might recommend suitable products, their commission-based compensation can create a conflict of interest that might cloud their advice.
You Make Decisions With Clarity and Confidence
When making major financial decisions—whether retirement planning, estate strategies, or investment choices—you need advice that’s free from hidden biases. Without a fiduciary standard, there’s always a risk that your advisor’s interests might come before yours, and that’s a gamble many aren’t willing to take when their financial future is on the line.
You might end up with an advisor whose role leans more toward sales, leading you to complicated financial products that seem appealing at first but could cost you tens of thousands of dollars over time. That’s not to say a non-fiduciary advisor can’t offer solid advice—but you can’t always count on it, as their incentives may shift when conflicts arise.
Plan Your Financial Future With Laurel Wealth Planning
The fiduciary advisors at Laurel Wealth Planning can help you with strategies to build wealth, reduce tax burdens, and make choices that reflect your long-term vision.
When you contact Laurel Wealth Planning, you get straightforward, conflict-free advice, with every recommendation made in your best interests. Schedule a complimentary meeting by emailing laurel.wealthplanning@laurelwealthplanning.com or calling (952) 854-6250. Find out whether Laurel Wealth Planning is the right team for you.
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The foregoing content was prepared by Indigo Marketing Agency with verbiage, opinions and/or financial commentary input provided by Laurel Wealth Planning.
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