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.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
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.
Related Content
- Five Things I Wish I’d Known Before I Retired
- Retirees’ Anti-Bucket List: 10 Experiences You Don’t Want
- The End of Retirement as We Know It
- The Five Stages of Retirement (and How to Skip Three of Them)
- Six Financial Actions to Take the Year Before Retirement
-
Want To Retire at 55? See If You Can Answer These Five QuestionsWho said you can’t retire at 55? If you say yes to these questions, you may be on your way to an early retirement.
-
I'm 57 with $4.1 million and looking to retire abroad in a few years. I no longer see the point in contributing to my 401(k). Am I wrong?We ask financial experts for advice.
-
Want To Retire at 55? See If You Can Answer These Five Questions
Who said you can’t retire at 55? If you say yes to these questions, you may be on your way to an early retirement.
-
I'm 57 With $4.1 Million and Plan to Retire Abroad in a Few Years. Can I Stop Contributing to My 401(k)?
We ask financial experts for advice.
-
Potential Trouble for Retirees: A Wealth Adviser's Guide to the OBBB's Impact on RetirementWhile some provisions might help, others could push you into a higher tax bracket and raise your costs. Be strategic about Roth conversions, charitable donations, estate tax plans and health care expenditures.
-
One Small Step for Your Money, One Giant Leap for RetirementSaving enough for retirement can sound as daunting as walking on the moon. But what would your future look like if you took one small step toward it this year?
-
This Is What You Really Need to Know About Medicare, From a Financial ExpertHealth care costs are a significant retirement expense, and Medicare offers essential but complex coverage that requires careful planning. Here's how to navigate Medicare's various parts, enrollment periods and income-based costs.
-
The 'Me-First' Rule of Retirement SpendingFollow the 'Me-First" rule and you won't have to worry about running out of money when the stock market goes south.
-
How to Plan Your First International Trip After RetirementRetirement paves the way for a world of exciting (and intimidating) experiences. An overseas journey can be an ideal way to embrace this new phase of life.
-
I'm a Financial Planner: Could Partial Retirement Be the Right Move for You?Many Americans close to retirement are questioning whether they should take the full leap into retirement or continue to work part-time.
