A fiduciary is someone who has your best interest in mind. When it comes to financial advisers, we certainly want to know that they are looking out for us rather than trying to take advantage of us.
In this article, Freedom Debt Relief reviews a few ways to help you tell if your financial adviser is looking out for you or himself.
Table of Contents
Are You A Fiduciary?
Being a fiduciary means a commitment to put the client’s best interest first. There aren’t really any hard and fast rules when it comes to being a fiduciary. But if an adviser is a fiduciary, they will often display it on their website.
Freedom Debt Relief reviews also notes that a fiduciary is completely transparent. They must disclose all potential conflicts of interest, commissions earned through 3rd parties, and all important facts just to name a few characteristics fiduciaries abide by.
While you mostly have to take an advisers word that they are a fiduciary, having the adviser mention this up front and displaying related information on their website is a great step toward their commitment to you.
Are You Or Your Firm Affiliated With A Broker-Dealer?
Some investment advisers are also broker-dealers or affiliated with one. In those cases, the adviser is usually incentivized to sell securities that will earn the adviser a commission.
The bottom of an adviser’s website, which usually contains lots of fine print, can reveal if they are affiliated with a broker dealer. Check if you see the text “Securities offered through [company name], member of FINRA and SIPC.” If so, you’re dealing with a broker-dealer and they aren’t likely to have your best interest in mind.
How Is Custody Of Funds Handled?
Depending on how involved a financial adviser is with investment management, they may have custody of funds. In this case, it’s important that they are using well known custodians such as TD Ameritrade, Schwab, Vanguard or similar well known brands.
Freedom Debt Relief reviews points out that when an adviser has custody of funds, it means that they are able to trade on your behalf. You still have full access to your funds in most cases.
The main point about how funds are held is that the funds are not in some unknown bank account that the adviser sets up. It should be with a well known custodian.
What Is Your Relation With Any Other Firms?
Knowing which other relations a firm has can reveal a lot about potential conflicts of interest. Depending on the relation, there can be an incentive for the adviser to receive commissions by selling certain products.
Even if a product may be right for you, it’s important to know if the adviser received any type of commission or other kickback for selling the product.
With the above tips, you’ll be armed with a way to quickly evaluate whether or not a financial adviser is looking out for your best interest.
Freedom Debt Relief reviews can help you get your debt under control. If you’d like a free evaluation from a credit counselor, contact them at freedomdebtrelief.com.