Editor’s note: This is part two of a two-part series about the importance of working with a fiduciary financial adviser. Part one is Three Ways Fiduciary Financial Planners Put You First.
When you work with a fiduciary, you gain access to personalized, objective and comprehensive financial advice. This relationship not only helps you make informed decisions but also provides confidence, time savings and the potential for improved financial outcomes.
To help you select a fiduciary financial planner, start with these questions. Based on their answers, you’ll be able to determine if they are the right financial professional for you.
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1. What are your areas of focus?
Financial professionals often bring specific expertise in different client demographics. Some work with a broad range, while others concentrate on groups like those approaching or already in retirement. If you’re close to retirement, finding an adviser specializing in this stage can provide tailored strategies for managing income, optimizing Social Security benefits and aligning your investments with your retirement goals. These steps can help ensure you’re choosing a fiduciary who will act in your best interest.
2. Are you held to the fiduciary standard?
Fiduciary advisers are legally required to prioritize their clients' best interests. They must disclose any conflicts of interest and be transparent about fees and compensation. Unlike non-fiduciaries, who may recommend products that yield higher commissions for them, fiduciaries are dedicated to advancing their clients’ financial well-being. An Investment Adviser Representative (IAR) is an example of a financial professional committed to the rigorous fiduciary standard.
3. How many people are on your team?
Financial professionals with team support often provide more comprehensive services. Administrative staff can handle routine tasks, freeing the adviser to focus on high-level financial planning. A team approach enhances client service, ensuring multiple professionals are available to promptly address your needs.
4. What types of products and services do you offer?
Advisers can be either “captive” or independent. Captive advisers may be limited to products from their firm, while independent advisers have access to diverse options across providers. This flexibility allows them to tailor solutions to fit your needs and often results in better-aligned investment strategies with potentially lower costs.
5. Does your firm have proprietary products?
Advisers at large firms might recommend proprietary products exclusive to that firm. It’s essential to compare these with other options to ensure they’re cost-effective and aligned with your goals. Independent advisers typically aren’t tied to proprietary products, offering more objective assessments of available choices.
6. What professional licenses do you hold?
An adviser’s licenses determine what products they can offer. For example, an adviser with only an insurance license may provide only insurance products, while one with securities licenses can recommend stocks, bonds and mutual funds. Advisers with both can offer a broader range of solutions that meet diverse client needs.
7. What is your investment philosophy?
Advisers have varying investment approaches, from aggressive growth to conservative preservation. Some focus solely on stocks, while others may also use insurance products. Make sure the adviser’s philosophy aligns with your goals, risk tolerance and preferences.
8. How do you evaluate investments?
Understanding an adviser’s investment evaluation process is crucial for trusting their recommendations. Ask about their research methods, like fundamental and technical analysis, and whether they conduct due diligence. An adviser who invests personally in recommended products shows confidence in their choices.
9. How can I trust you?
Trust is foundational in the adviser-client relationship. Seek referrals from trusted sources and verify that your funds are held by a third-party custodian for added security. Avoid writing checks directly to the adviser or their firm, as this can help prevent potential fraud.
10. How do you get paid?
Advisers may be compensated through commissions, fees or both. Commission-based advisers earn from product sales, which can create conflicts of interest, while fee-based advisers charge for advice and often offer more objective recommendations. Make sure you understand the fee structure to avoid surprises and ensure alignment with your interests.
11. Do you have a business continuity plan?
Knowing what happens to your investments if your adviser leaves or retires is essential. A solid continuity plan ensures another adviser familiar with your situation can step in, keeping your investments well-managed and service uninterrupted.
Choosing the right financial professional is key to reaching your long-term goals. Just like selecting a specialist for your health or home, taking time to research and ask these critical questions can help you find a fiduciary adviser who’s the right fit for you and your family.
Insurance products and services offered by Melton & Company, LLC. Investment advisory services offered through MariPau Wealth Management, LLC an SEC Registered Investment Advisor. Please note that the use of the term “registered” to refer to our firm and/or our associated persons does not imply any particular level of skill or training. Melton & Company, LLC and MariPau Wealth Management, LLC are not affiliated entities. While the processes mentioned in this article have been designed with care, financial outcomes can never be guaranteed as investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. None of the information contained in this article shall constitute an offer to sell or solicit any offer to buy a security or any insurance product. Any references to protection benefits, safety, security or steady and reliable income streams in this article refer only to fixed insurance products. They do not refer, in any way, to securities or investment advisory products. Annuity guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company. Annuities are insurance products that may be subject to fees, surrender charges and holding periods which vary by insurance company. Annuities are not FDIC insured. The information and opinions contained in this article are provided by the author and have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. They are given for informational purposes only and are not a solicitation to buy or sell any of the products mentioned. This article is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual’s situation. Jon Melton and Melton & Company, LLC do not give tax or legal advice. Tax laws are subject to change and can affect results. The firm is not affiliated with the U.S. government or any governmental agency. Hypothetical examples and client examples have been provided for illustrative purposes only and should not be construed as advice designed to meet the particular needs of an individual’s situation.
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