When you step into the world of finance, there are many areas you will need to cover if you are to protect your investments. To begin with, a fiduciary and a financial advisor are two very different roles, both of which are needed to protect you and your money.
Who needs to be a fiduciary, and what is the difference between a fiduciary vs financial advisor? Our guide has all the information you need right here to help you with your financial planning.
What Is a Fiduciary?
A fiduciary is an individual or organization that acts on behalf of another person or entity, putting the client’s interests first. The word fiduciary comes from the Latin word Fiducia, which means trust.
A fiduciary duty is the highest standard of care at either equity or law. A fiduciary must not only be honest but must also exercise a standard of care that is higher than the duty owed to a normal customer.
What Is a Financial Advisor?
A financial advisor is an individual who provides guidance and advice to clients on how to best manage their finances. Financial advisors can work with individuals, families, or businesses.
Their services can cover a wide range of topics, from budgeting and investing to retirement planning and insurance. Not all financial advisors have the same qualifications or offer the same services.
But, they all share the common goal of helping their clients make sound financial decisions.
Which One Do You Need?
For many people, the words fiduciary and financial advisor are interchangeable. However, there is a big difference between the two. A financial advisor is anyone who provides financial services, including investment advice, tax advice, and insurance advice.
A fiduciary is a financial advisor who is legally obligated to always put their client’s best interests first. Not all financial advisors are fiduciaries, but all fiduciaries are financial advisors.
So, do you need a fiduciary? It depends. If you are working with a financial advisor who is not a fiduciary, be sure to ask them if they are always putting your best interests first. If they are not, you may want to consider finding a fiduciary.
You can also find more information here to get started with retirement plan consulting.
How to Find the Right Fiduciary or Financial Advisor
There are a few key things to look for when finding the right fiduciary or financial advisor. First, make sure they are a Registered Investment Advisor (RIA). Second, check their fees. Some fiduciaries and financial advisors charge hourly, while others charge a percentage of assets.
Third, look at their experience and credentials. Make sure they have experience working with clients who have similar goals and objectives to you. Finally, ask for references and meet with them in person to get a feel for their personality and how they would work with you.
Learning the Difference Between Fiduciary vs Financial Advisor
If you’re not sure whether you should work with a fiduciary vs financial advisor, the best thing to do is to talk to both and see which one you feel more comfortable with.
Make sure to ask questions, and don’t be afraid to ask for references. Once you’ve decided on the right professional for you, make sure to have a written agreement in place that outlines their responsibilities and your expectations.
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