What is Fiduciary Advice?

• What is Fiduciary Advice by Investopedia

• What is Fiduciary? Let’s Ask Clark

• Independent Fiduciary Advice vs. Financial Advisor

• Fiduciary Advice vs. Financial Planning Education

• Fiduciary Advice vs. Financial Coaching

• Independent Fiduciary Advice Fee Structure

• Hidden Fees and Conflicts of Interest

• Fiduciary Advisory Client Onboarding

• Client Onboarding Risk Tolerance

• Client Intake Forms

• Client Onboarding Legal Documents

• Client Onboarding Agreements

• Fiduciary Advice and Advisor Coordination

• The Financial Planning Gap Analysis

5 Common Misconceptions About Fiduciaries

By Investopedia

Not all financial professionals have your best interests in mind. Chances are you have used a fiduciary at some time, and chances are you’ve been a fiduciary to someone else as well. Whether or not you can define the term, the fiduciary plays a critical role in finance and in life. A fiduciary, in any context, is a person who is ethically or legally obliged to act in the best interests of another party. A doctor or an accountant takes on a fiduciary role. A fiduciary investment adviser is required to choose investments regardless of their own self-interest or the interest of any other party. An investment advisor who is not a fiduciary follows a less-stringent code requiring only that investments be suitable to the client.

Key Takeaways

• A fiduciary has an obligation to act in the best interests of another party.

• A fiduciary investment adviser is obligated to choose investment products that are in the best interests of the client regardless of self-interest or a third party’s interests.

• Registered investment advisers (RIAs) have a fiduciary duty to clients while broker-dealers must meet the less-stringent standard of suitability to the client’s needs.

• Fiduciary law is complex, and it can take a blatant misdeed to prove a breach of trust.

What Is a Fiduciary?

A fiduciary relationship involves two parties: the fiduciary and the client. Fiduciaries commit to putting the client’s needs in front of their own. This is considered the highest standard of care under the law.

In practical terms, it often comes down to who’s paying whom. An investment adviser may receive a commission for selling certain investment products, raising a potential conflict of interest between the client’s interest and the adviser’s own interest.

Unfortunately, fiduciaries do not always meet the high standard they are supposed to. In addition, there are specific risks to consider when entering into a fiduciary-client relationship. Here are five factors to consider to protect yourself and your assets.

Misconception #1: Everybody Is a Fiduciary

There are two standards of care that apply to money managers: the fiduciary standardand the suitability standard. The fiduciary standard requires the professional to act in the best interests of the client.1 The suitability standard requires only that a financial advisor make recommendations that are suitable for the needs of the client, even if they are not the best choice for the client’s needs.

The fiduciary relationship may be defined by law. For example, a court that appoints an executor to an estate may mandate that the executor do the job to a fiduciary standard.

In other cases, the fiduciary duty is a professional commitment. For example, a certified financial planner (CFP) is bound to the fiduciary standard by the Code of Conduct of the National Association of Personal Financial Advisors (NAPFA).

Misconception #2: There Is Always a Test or License

Fiduciaries gain the designation by actions, not education. Some fiduciaries are chartered financial analysts (CFA) who went through a grueling process to gain the certification. Others may have taken a test to become registered investment advisers.

Some take on a fiduciary role for a single purpose. A fiduciary can be hired by a company that needs an independent third party to oversee a process or plan. Volunteers for the investment committee of a non-profit agree to act in the best interest of the organization.

3(16) Plan Administrators

A 3(16) fiduciary is a service provider hired by a company to administer its retirement plan. The plan administrator follows a set of duties to ensure that the plan is in compliance with regulatory guidelines.

Misconception #3: Fiduciary Law Is Easy to Enforce

Fiduciaries who breach their duty may face tough civil and criminal penalties. It can be difficult, however, to prove a breach of duty in court.

Moreover, they can do their duty towards their clients and still lose money for the client.

For example, imagine you ask your financial adviser to shelter your portfolio from risk even at the expense of sacrificing potential profit. The adviser puts some of the money into blue-chip stocks, which promptly crash in value.

In this case, the adviser has not acted in bad faith. You would have to prove that they acted maliciously and in the interest of some other party in order to prove a breach of fiduciary duty.

Misconception #4: A Fiduciary Guarantees a Profit or Protection from Losses

Under industry rules, no financial adviser can guarantee that you will profit from any investment. If you don’t see the results you were hoping for, that doesn’t mean that your adviser breached a fiduciary duty. Hiring a fiduciary is not a guarantee against an unfavorable outcome. You can still experience investment losses when a fiduciary is managing your portfolio. The Employee Retirement Income Security Act of 1974 (ERISA) set the minimum standards for most retirement plans. To ensure compliance with these rules, companies often seek a fiduciary to act as an independent third party overseeing their plan.

Misconception #5: Fiduciaries Are Always Honest

Most financial advisers are in the business to help you manage your money and reach your long-term goals. They will not knowingly advise you to take actions contrary to your best interests. Being a fiduciary means that you uphold your client’s interest first and are not self-serving. Still, some people will be bad actors and violate the rules of fiduciary conduct. Even if someone is legally required to act as a fiduciary, you should still do your homework. Always vet any financial professionals that you hire to manage your money.

Frequently Asked Questions

Are Fiduciaries Trustworthy?

Fiduciaries hold positions that demand trust. This is not to say that trust cannot be broken.

If you are handing your money over to someone else to manage, you still need to keep an eye on your financial affairs. It’s not about being suspicious. It’s about being proactive.

How Can You Tell If Someone Is a Fiduciary?

Fiduciaries have no need to keep their status confidential. Actually, they have an incentive to advertise their fiduciary commitment in order to promote confidence in their services.

if you are wondering whether an investment professional is a fiduciary, just ask.

How Do Fiduciaries Get Paid?

In the personal investing business, a fiduciary adviser may collect fixed fees, commissions, or a percentage based on assets under management (AUM) for overseeing a client’s portfolio.

There are fiduciary relationships in many other fields. A doctor is a fiduciary to a patient, and an accountant is a fiduciary to a client. They are paid according to their own industry practices.

The Bottom Line

Expect a high standard of service from a Fiduciary Advisor, but don’t let your guard down. Nobody cares more about your money than you do. You don’t need to be an expert, but you should have enough knowledge to be able to make informed decisions about all of your financial affairs.

Fiduciary Advice

When searching for investment advice, investors are confronted with many choices of service providers operating under titles such as certified financial planner, financial consultant, registered investment advisor, stockbroker, and insurance agent. All these “Financial Advisor” titles can be confusing because it’s not clear whether these financial professionals are legally required to have a client’s best interest in mind when making Financial Planning and Investment Management recommendations.

Maybe you’ve read that the Department of Labor (DOL) announced a substantial overhaul in the regulation of financial advice given on retirement savings. This discussion involves two key terms: fiduciary and suitability. What does it mean for a Financial Advisor to operate on a fiduciary standard vs. a suitability standard?

THE FIDUCIARY STANDARD, according to the DOL, is someone who is required to put their clients’ best interest before their own profits. Fiduciaries include registered investment advisors, advisors to mutual funds (like Dimensional), and others who hold themselves out to be fiduciaries (like trustees and certain retirement plan consultants).

Fiduciaries are required to act impartially and provide advice that is in their clients’ best interest, and in doing so, must act with the care, skill, prudence, and diligence that a prudent person would exercise based on the current circumstances. A fiduciary must avoid misleading statements about fees and must avoid conflicts of interest.

Fiduciaries are typically compensated by payment of a fee rather than a commission. Fiduciaries to retirement plans, plan participants, and IRAs are also prohibited from receiving payments that create conflicts of interest unless they comply with the terms of certain exemptions issued by the DOL.

Most importantly, clients can expect that a fiduciary will act with transparency and avoid prohibited conflicts of interest. Fiduciaries are personally liable for breaches of their fiduciary duties. For example, if there is a loss caused by a breach of fiduciary duty, the fiduciary must make the plan or IRA whole by restoring any losses caused by the breach and restoring to the plan or IRA any profits made through the use of plan or IRA assets. Civil actions to obtain appropriate relief for a breach of fiduciary duty may be brought by a participant, beneficiary, fiduciary, or the US Secretary of Labor, and the fiduciary may be subject to excise tax penalties.

Resources for Further Reading

To dive deeper into the topic of the fiduciary standard and financial advisory services, consider exploring the following resources:

• Understanding the Fiduciary Duty – A comprehensive guide by the U.S. Securities and Exchange Commission (SEC) that explains the fiduciary duty and provides insights for investors.

• What Is a Fiduciary? – An informative article by Investor.gov that breaks down the fiduciary concept and its importance for investors.

• Fiduciary vs. Suitability Standard – An article on NerdWallet that compares the fiduciary standard with the suitability standard and highlights the implications for investors.

Fiduciary Advice vs. Financial Advisors

A fiduciary is a financial professional who is legally bound to act in your best interest. Independent Fiduciary Advisors are obligated to prioritize your needs above their own, ensuring complete transparency in their recommendations and actions. By working with an Independent Fiduciary Advisor, you gain the assurance that their advice is unbiased and solely focused on your financial well-being. This applies to each of the essential elements of the Financial Planning Process:

• Financial Independence or Retirement Planning

• Risk Management or Insurance Planning

• Estate Planning

• Education Planning

• Tax Planning Strategies

• Investment Management Strategies

• Cash Flow Management

Financial Advisors vs. Independent Fiduciary Advisors

The term “financial advisor” encompasses a broader range of professionals in the financial industry. Financial advisors offer guidance and services to clients, but not all of them are fiduciaries. It’s important to recognize that financial advisors who are not fiduciaries may have different obligations and may prioritize their own interests or those of their company over yours. Understanding this distinction is vital to making informed decisions regarding your financial affairs.

Key Differences: Fiduciary vs. Financial Advisor

1. Legal Obligation: Fiduciaries have a legal obligation to act in your best interest, while financial advisors may not have the same level of legal responsibility.

2. Fee Structure: Fiduciaries often charge fees based on a percentage of your assets under management or a predetermined flat fee. Financial advisors may receive commissions for recommending specific products or services, potentially creating conflicts of interest.

3. Transparency: Fiduciaries are required to disclose any potential conflicts of interest and provide clear explanations regarding fees, compensation, and affiliations that may influence their recommendations. Financial advisors may not be bound by the same transparency requirements.

4. Scope of Services: Fiduciaries typically offer comprehensive financial planning services, covering various aspects such as retirement planning, tax strategies, estate planning, and investment management. Financial advisors may specialize in specific areas and may not provide the same level of holistic advice.

Fiduciary Advice for Making Informed Decisions

To help you choose between an Independent Fiduciary Advisor and a Financial Advisor, here are some helpful steps:

1. Assess Your Goals: Determine your financial objectives, whether it’s retirement planning, investment management, or specific financial milestones.

2. Research and Interview: Conduct thorough research on potential fiduciaries and financial advisors. Schedule interviews to discuss your goals and understand their approach.

3. Evaluate Credentials: Inquire about their certifications and credentials, such as Certified Financial Planner (CFP®) or Chartered Financial Analyst (CFA®), to assess their expertise and commitment to their profession.

4. Request References: Ask for references from current clients to gain insight into their experiences and satisfaction with the fiduciary or financial advisor.

5. Compatibility: Assess the compatibility and communication style between you and the professional. Open and honest communication is vital for a successful long-term relationship.

6. Review Agreements: Carefully review any agreements, contracts, or engagement letters, ensuring that the terms align with your expectations and protect your interests.

Choosing between a fiduciary and a financial advisor is a significant decision that can impact your financial future. By understanding the differences between the two and following the steps outlined above, you can confidently select the professional who best suits your needs. At BayRock Financial, we provide Financial Planning and Investment Management through Independent Fiduciary Advisors who are also CFP® Professionals to help you make informed financial decisions.

Independent Fiduciary Advisors vs. Financial Coaching Professionals

When seeking financial guidance, you may come across two distinct types of professionals: independent fiduciary advisors and financial coaching professionals. Both play important roles in assisting individuals with their financial journeys. In this article, we will explore the key differences between these two types of professionals, helping you understand their unique offerings and determine which one aligns better with your specific needs and goals.

Independent Fiduciary Advisors

Independent fiduciary advisors are financial professionals who are legally bound to act in your best interest. Their primary objective is to prioritize your needs and goals, providing unbiased advice and recommendations. They offer comprehensive financial planning services, taking into account various aspects such as retirement planning, investment management, tax strategies, and estate planning. Independent fiduciary advisors typically charge fees based on a percentage of assets under management or a flat fee, ensuring a transparent fee structure that aligns with their clients’ interests.

For Fiduciary Advice Hire a CFP® Professional

One of the key advantages of working with independent fiduciary advisors is their legal obligation to act solely in your best interest. This commitment offers peace of mind, knowing that the advice and recommendations provided are unbiased and driven by your specific financial goals. Independent fiduciary advisors bring a depth of expertise, often holding certifications such as Certified Financial Planner (CFP®), which demonstrates their knowledge and commitment to their profession.

Financial Coaching Professionals

Financial coaching professionals, on the other hand, focus on providing guidance and support to individuals in specific areas of personal finance. They offer coaching services aimed at helping clients develop financial literacy, improve money management skills, and make informed financial decisions. Financial coaching professionals often work with clients on a one-on-one basis, helping them set financial goals, create budgets, and develop strategies to achieve those goals. Their coaching sessions may cover topics such as debt reduction, savings strategies, and financial mindset.

Unlike independent fiduciary advisors, financial coaching professionals may not be bound by a legal obligation to act in your best interest. However, they can still provide valuable guidance and accountability in specific areas of personal finance. Financial coaching professionals often charge fees for their coaching services, which can vary depending on the duration and depth of the coaching engagement.

Choosing the Right Path for Your Financial Needs

When deciding between independent fiduciary advisors and financial coaching professionals, it’s crucial to consider your specific financial needs and goals. Here are some key points to consider:

1. Complexity of Financial Situation: If you require comprehensive financial planning and advice that encompasses multiple areas of personal finance, such as retirement planning, investment management, and tax strategies, an independent fiduciary advisor may be better suited to address your needs.

2. Desire for Accountability and Skill Building: If you seek guidance in improving specific financial skills or need accountability in achieving your financial goals, a financial coaching professional can provide the targeted support and education necessary for your growth.

3. Legal Obligation vs. Personal Guidance: Independent fiduciary advisors offer a legal obligation to act in your best interest, providing an extra layer of protection and assurance. Financial coaching professionals focus on personal guidance and education to empower you in specific areas of personal finance.

4. Fee Structure and Budget: Consider your budget and the fee structures of each professional. Independent fiduciary advisors typically charge fees based on a percentage of assets under management or a flat fee, while financial coaching professionals may charge per session or offer packages for their coaching services.

It’s important to conduct thorough research and interview potential professionals to ensure they align with your values, expertise, and financial goals. Consider seeking recommendations from trusted sources and reviewing the credentials and experience of the professionals you are considering.

Independent fiduciary advisors and financial coaching professionals offer distinct approaches to financial guidance and support. By understanding the differences between these two types of professionals and evaluating your specific needs, you can make an informed decision that aligns with your financial goals. Whether you choose the comprehensive expertise of an independent fiduciary advisor or the targeted support of a financial coaching professional, both can play valuable roles in your financial journey. Remember to prioritize transparency, expertise, and alignment with your goals when selecting a professional to guide you towards financial success.

Independent Fiduciary Advisor vs. Financial Planning Educational

When it comes to seeking financial guidance, you may come across two different avenues: working with an independent fiduciary advisor or accessing financial planning educational content such as podcasts or online courses. Both options can provide valuable insights, but they differ in terms of approach and level of personalization. In this article, we will explore the distinctions between an independent fiduciary advisor and financial planning educational content, helping you determine which option best suits your needs and preferences.

Financial Planning Educational Content

Financial planning educational content, such as podcasts or online courses, offers a broader approach to financial education. These resources provide general information, insights, and strategies related to various aspects of personal finance. They aim to empower individuals with knowledge and tools to make informed financial decisions and improve their overall financial literacy.

Financial planning educational content is typically designed to be accessible to a wide audience. It covers a range of topics, including budgeting, investing, debt management, and retirement planning. Podcasts feature interviews, discussions, and expert insights, while online courses provide structured modules and interactive learning experiences. These resources offer the flexibility to learn at your own pace and focus on specific areas of interest.

While financial planning educational content can be informative and educational, it lacks the personalized approach and tailored advice that an independent fiduciary advisor provides. Educational content is designed to provide general guidance and strategies, but it may not take into account your unique financial situation, goals, or risk tolerance. It is important to note that financial planning educational content should be used as a supplement to, rather than a substitute for, personalized financial advice.

Choosing the Right Path for Your Financial Needs

When deciding between working with an independent fiduciary advisor and accessing financial planning educational content, consider the following factors:

1. Personalization: If you prefer personalized guidance tailored to your specific financial circumstances, goals, and risk tolerance, working with an independent fiduciary advisor is recommended.

2. Comprehensive Advice vs. General Knowledge: Independent fiduciary advisors provide comprehensive financial planning services, addressing various aspects of personal finance. If you require in-depth guidance across multiple areas, an advisor’s personalized approach is beneficial. On the other hand, financial planning educational content offers broader knowledge and strategies but may not address your specific situation.

3. Ongoing Support and Monitoring: Independent fiduciary advisors establish long-term relationships with their clients, offering ongoing support, monitoring, and adjustments to your financial plan as needed. Educational content does not provide this level of ongoing guidance.

4. Learning Style and Flexibility: Financial planning educational content, such as podcasts or online courses, allows you to learn at your own pace and focus on specific topics of interest. If you prefer a self-guided learning approach or have limited availability for one-on-one meetings, educational content may be a suitable choice.

It is worth noting that both options can be complementary. You can leverage financial planning educational content to enhance your financial knowledge and supplement the guidance provided by an independent fiduciary advisor.

Choosing between an independent fiduciary advisor and financial planning educational content depends on your specific needs, preferences, and the level of personalized guidance you require. Independent fiduciary advisors provide tailored advice, personalized plans, and ongoing support, ensuring your financial goals are addressed holistically. Financial planning educational content offers broader knowledge and strategies, providing valuable insights to enhance your financial literacy. Consider your financial goals, learning style, and need for personalized guidance when making a decision. Remember that seeking professional advice from an independent fiduciary advisor can help you navigate complex financial situations and receive tailored recommendations aligned with your objectives.

Fiduciary Advice: Understanding Fee Structures

We found this informative video from Ask Clark. The video highlights a question from a listener about the cost of Fiduciary Advice vs. the cost of commission-based investments. The video will help you make informed decisions about your investments in terms of the fees you’re paying with a Financial Sales professional vs. an Independent Fiduciary Advisor.

Key Takeaways

1. The fiduciary mandate requires financial advisors to act in the best interests of their clients, prioritizing low-cost investments and minimizing fees.

2. By switching to a fiduciary advisor, you may save significant amounts of money in the long run, even if the advisory fees are higher initially.

3. Consider reputable firms like Vanguard, Schwab, and Fidelity, which offer fiduciary services with varying fee structures and investment options.

Step-by-Step Process

Here’s a step-by-step process to help you navigate the decision-making process:

1. Assess the current fees and expenses associated with your accounts and investments.

2. Research fiduciary advisors and compare their fee structures, services, and track records.

3. Evaluate your investment goals, risk tolerance, and financial circumstances to determine the most suitable advisor.

4. Consider the specific recommendations and services offered by each fiduciary advisor.

5. Make an informed decision based on a comprehensive analysis of costs, benefits, and alignment with your financial goals.

As Clark emphasizes, “What you’re not seeing is all the embedded expenses in the things you’re in now.” I call these “hidden fees” and those fees can really add up in your investment portfolio.

Resources Mentioned

1. Schwab: A leading brokerage firm offering a range of investment services, including fiduciary options like Schwab Intelligent Portfolios and personalized advice.

2. Vanguard: A renowned investment management company providing low-cost index funds and fiduciary services, such as Vanguard Personal Advisor Services (PAS).

3. Fidelity: A trusted financial services provider offering a wide range of investment options, including fiduciary advisory services.

These resources serve as reputable options for investors seeking fiduciary relationships and low-cost investment solutions.

Clark’s Fiduciary Advice

Clark’s advice would (IMHO) be to carefully assess the fees, services, and fiduciary commitment of your current financial advisor. While the shift to a fiduciary relationship might result in slightly higher fees initially, the long-term benefits of lower costs and unbiased advice can significantly outweigh the expenses. Consider conducting thorough research and consulting with multiple fiduciary advisors to determine the best fit for your investment needs and goals.

Frequently Asked Questions (FAQ)

1. What is a fiduciary relationship? A fiduciary relationship is one where a financial advisor is legally obligated to act in the best interests of their clients, prioritizing low-cost investments and minimizing conflicts of interest.

2. How can switching to a fiduciary advisor save me money? Fiduciary advisors are required to recommend low-cost investments, reducing hidden fees and expenses. Over time, these savings can significantly impact your investment returns.

3. Which firms offer fiduciary advisory services? Reputable firms like Vanguard, Schwab, and Fidelity provide fiduciary services, each with its unique fee structures and investment options.

4. What is a Transfer on Death (TOD) account? A Transfer on Death account designates a beneficiary who will receive the assets held in the account upon the account owner’s death. It’s a way to transfer ownership without going through probate.

5. How should I choose a fiduciary advisor? Consider factors such as the advisor’s track record, fee structure, services offered, and your individual investment goals when selecting a fiduciary advisor. Conducting thorough research and seeking recommendations can also be helpful.

Ask Clark or watch his Video about Hiring an Independent Fiduciary Advisor

If you listen to money expert Clark Howard, you’ve heard that you need a fee-only fiduciary as your financial advisor. That’s if you need a financial advisor at all. So you’d think hearing that your advisor is finally becoming a fiduciary would be great news. But what if they’re doubling their annual fee at the same time? Should you switch financial advisors?

That’s what a listener of the Clark Howard Podcast recently asked.

Should I Switch Financial Advisors Now That Mine Became a Fiduciary and Is Charging 1% Annual Fees?

My high-commission financial advisor just became a fiduciary. Now they’re doubling their annual fee to 1%. Should I switch financial advisors?

That’s what a listener asked on the June 28 podcast episode.

Asked Margaret in Colorado: “My friend and financial advisor met and informed me that she and all the other advisors [at the company] are being mandated to get a fiduciary license.

“Because of this changeover, they will be going from charging fees to a cost of 1% of my conservative funds. I have three accounts with them: an IRA (spouse benefit ~$100K), a Roth (~$100K) and a transfer on death ($126K).

“I read your article on clark.com titled “Should You Manage Your Own Investment Portfolio?” and it indicates that [a] 1% [annual fee] is not outrageous [for a fee-only fiduciary financial advisor]. So do I stay? Or should I switch to one of your three favorites? And is so, which one?

“I will be paying double what I was paying — approximately $1,500 in fees vs. $3,000 if charged 1%. Please help!”

Margaret almost certainly will end up with more money long-term with her brokerage firm switching to a fiduciary standard, as Clark explains. Even with the move from 0.5% to 1% in annual fees.

“So how is it that you’ll end up saving money by paying more fees?” Clark says. “Because when you’re with a full-commission stock brokerage, which this one historically has been, they’ve historically put you in high-cost funds and high-cost investments because that made them the most money.

“Now as a fiduciary relationship, their duty is to put you in things that have extremely low costs.

“The odds are what you’ll save in commissions and ongoing embedded expense ratios in funds will be so much cheaper that you should end up with much more money down the road even paying higher [annual] fees than you were paying. Because what you’re not seeing is all the embedded expenses in the [investments] you’re in.”

Should I Switch To Fidelity, Schwab or Vanguard?

Margaret referenced Clark’s three favorite investment companies. Which of course are Fidelity, Schwab and Vanguard.

Are these options better than the formerly high-commission broker that’s apparently “going straight” and becoming a fiduciary due to increased competition in the marketplace?

It depends.

The great thing about Clark’s “favorite children” is that they offer such a depth of services.

A lot of people are unclear on what a financial advisor is and if they need one.

If you’re only looking to handle your investment portfolio, you don’t need to pay a standard 1% annual fee to an advisor.

Garrett Planning Network: Hourly Advice Without a Long-Term Commitment

Even if you need very occasional advice on financial planning (or something similar), you can try the Garrett Planning Network. Enter your ZIP code and you’ll get a list of fee-only fiduciaries near you.

Garrett’s member advisors provide financial planning and investment advice on an hourly, as-needed basis.

Why Clark Recommends Vanguard’s Hybrid Service

If you don’t want to manage your own portfolio, and you need relatively minimal financial advice, Clark points at Vanguard’s Personal Advisor as a great option.

You pay an all-in cost (annual fee plus expense ratios for the investments) of 0.37%. Vanguard’s robo-advisor handles your investments. And you get ongoing unlimited access to human financial advisors. (You need to proactively schedule phone calls around specific topics and you may not talk to the same person every time.)

“You will pay lower fees significantly and you’ll be in a fiduciary relationship,” Clark says. “And you’d be getting advice and guidance and placement in funds. So it would potentially be a much cheaper choice for you.”

He also recommended Schwab as a similar option.

“Your accounts are larger than what I would recommend for Schwab’s Intelligent Portfolios. But you could look at the other advice offerings from Schwab,” Clark says. “I would say in your case, if you’re looking at the alternative, it would likely be Vanguard would be the best move for you.”

Final Thoughts

There’s nothing wrong with paying 1% in annual fees for a fee-only fiduciary financial advisor. Just make sure you actually need all the services that a true financial advisor provides. (In other words, make sure you need help that goes well beyond investing.)

However, you can save money by considering hybrid advisors like Vanguard’s Personal Advisor Services. You’ll be able to get investment help and some level of financial advice beyond that for less than 0.40%. If that’s the case, consider switching financial advisors.

What is Fiduciary Advice?

In this article:

• What is Fiduciary Advice by Investopedia

• What is Fiduciary? Let’s Ask Clark

• Independent Fiduciary Advice vs. Financial Advisor

• Fiduciary Advice vs. Financial Planning Education

• Fiduciary Advice vs. Financial Coaching

• Independent Fiduciary Advice Fee Structure

Fiduciary Advice More to Come Next Time:

• Hidden Fees and Conflicts of Interest

• Fiduciary Advisory Client Onboarding

• Client Onboarding Risk Tolerance

• Client Intake Forms

• Client Onboarding Legal Documents

• Client Onboarding Agreements

• Fiduciary Advice and Advisor Coordination

• The Financial Planning Gap Analysis