What it Means to Be a Fiduciary Financial Advisor

Partnering with the best financial advisor for your situation is a big decision. You need to examine their reputation, the services they offer, and if their philosophy supports your goals. While each consideration is important for building a strong foundation, we believe fiduciary duty is the mortar that holds the partnership together.

A fiduciary financial advisor is obligated to make every decision with the sole objective of helping the client reach their goals. This means avoiding conflicts of interest, providing a full and factual picture when recommending investments or strategies, and putting the client’s interests before their own.

While there are many professional designations that bind advisors to a fiduciary obligation, we believe that a CERTIFIED FINANCIAL PLANNER™ (CFP®) possesses the most comprehensive set of skills required to be the best fiduciary financial advisor.

Being a fiduciary financial advisor means upholding a strict code of conduct and acting with integrity. When you work with a CFP®, they are bound by a commitment to act ethically. A CFP® must uphold three distinct fiduciary duties when engaging in both financial planning and providing financial advice:

• Duty of Care: The advisor must understand the client’s circumstances, develop and prioritize goals, analyze a course of action to achieve the goals, create and present prudent recommendations, and implement the plan, monitoring and updating the client as needed.
• Duty of Loyalty: The advisor must place the client’s interests above self and firm while avoiding conflicts of interest or disclosing and properly managing any material conflicts of interest.
• Duty to Follow Client Instructions: The advisor must follow all client objectives while adhering to all terms of engagement and reasonable client directions.

The Benefits of Working with a Fiduciary Wealth Advisor

When you work with a fiduciary wealth advisor, you gain peace of mind in knowing that they make every recommendation with your best interests in mind. There will never be any hidden agendas or recommendations made to achieve high commissions. Having confidence in your advisor is important, and few designations instill the confidence and trust of a fiduciary.

Beyond the duty to act in your best interest, fiduciaries provide a level of transparency and openness that is too often missing from financial interactions. When you work with a fiduciary financial advisor, you can trust that they will provide full and factual information when making recommendations. Before moving forward, they will ensure you have all the information required to make informed decisions about your financial future.

As your financial future evolves, a fiduciary advisor performs due diligence to adjust the strategy. This flexible approach to wealth management creates a malleable plan that limits exposure to risk. With a fiduciary wealth advisor, you receive the same high standard of care and consideration through life’s ups and downs.

Is Your Financial Advisor a Fiduciary?

Becoming a financial advisor does not require a fiduciary oath. Some advisors, notably those who earn commissions, make recommendations that may not always have the client’s best interests in mind. These suggestions are often fueled by monetary or organizational incentives rather than the client’s best interests.

Determining if your financial advisor is a fiduciary is often as easy as asking them. Most will answer truthfully at the risk of making a fraudulent statement, but it’s never a bad idea to check their credentials. Certain professional certifications carry a fiduciary obligation, and the organizations actively update their directories to account for all current certificate holders.

Below are three common fiduciary certifications, and links to the verification database.

• Registered Investment Adviser (RIA)
• CERTIFIED FINANCIAL PLANNER™ (CPF®)
• Certified Financial Fiduciary (CFF)

When a Financial Advisor Doesn’t Work in Your Best Interest

By law, a fiduciary must always act in the client’s best interests. If this duty is breached, the financial advisor faces serious professional, personal, and legal consequences. Given the dire ramifications of failing to uphold their duty, most fiduciaries work with integrity and professionalism. However, it is human to err, and despite the risks, fiduciaries will occasionally neglect their obligations.

Examples of a breach of fiduciary duty include:

• Failure to perform due diligence on life insurance recommendations
• Investing client money in funds that charge fees when they are eligible for identical funds that do not charge fees
• Making investment alterations without client authorization
• Omitting risks associated with recommended investments
• Any other action that benefits the advisor over the client

When a breach occurs, the advisor is subject to review by various financial governing bodies, including FINRA, the SEC, and CFP Board. If found in breach of duty, the organization may enforce disciplinary actions ranging from suspension of licensure to permanent revocation. Additionally, the breach renders the advisor vulnerable to legal action, and clients may be entitled to damages.

Wealth Advisors Who Have Your Best Interests in Mind

The financial world is unpredictable, and there are never any guarantees. Despite the uncertainty, you can count on a fiduciary wealth advisor to always make financial decisions with your best interest in mind. They are driven by a strict code of ethics and work closely with their clients to help achieve the best outcomes.

At Morgan Rosel Wealth Management, we take pride in our fiduciary duty and take every step to help our clients achieve their financial goals. Our team of experienced professionals is committed to providing transparent and personalized financial planning and advice. Your best interests are our top priority at all times. Contact us today to learn more about how we can help you secure your financial future.