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All reviews are prepared by our staff. Opinions expressed are solely those of the reviewer and have not been reviewed or approved by any advertiser. The information, including any rates, terms and fees associated with financial products, presented in the review is accurate as of the date of publication. SHARE: VioletaStoimenova/Getty Images June 03, 2022 Roger Wohlner is a contributing writer for Bankrate. Brian Beers is the managing editor for the Wealth team at Bankrate. He oversees editorial coverage of banking, investing, the economy and all things money. Bankrate logo The Bankrate promise
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here's an explanation for how we make money. Bankrate logo The Bankrate promise
Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. Bankrate follows a strict , so you can trust that we’re putting your interests first. All of our content is authored by and edited by , who ensure everything we publish is objective, accurate and trustworthy. Our investing reporters and editors focus on the points consumers care about most — how to get started, the best brokers, types of investment accounts, how to choose investments and more — so you can feel confident when investing your money. Investing disclosure: The investment information provided in this table is for informational and general educational purposes only and should not be construed as investment or financial advice. Bankrate does not offer advisory or brokerage services, nor does it provide individualized recommendations or personalized investment advice. Investment decisions should be based on an evaluation of your own personal financial situation, needs, risk tolerance and investment objectives. Investing involves risk including the potential loss of principal. Bankrate logo Editorial integrity
Bankrate follows a strict , so you can trust that we’re putting your interests first. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. Key Principles
We value your trust. Our mission is to provide readers with accurate and unbiased information, and we have editorial standards in place to ensure that happens. Our editors and reporters thoroughly fact-check editorial content to ensure the information you’re reading is accurate. We maintain a firewall between our advertisers and our editorial team. Our editorial team does not receive direct compensation from our advertisers. Editorial Independence
Bankrate’s editorial team writes on behalf of YOU – the reader. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information. Bankrate logo How we make money
You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. Being a fiduciary means that you act in the best interests of others. In the case of a financial advisor, the National Association of Personal Financial Advisors (NAPFA) specifies that a fiduciary should always act in the best interests of their clients. Further, a fiduciary should be proactive in disclosing any conflicts of interest that might impact their clients. What is a fiduciary
In general, a fiduciary is a person or organization that acts on behalf of another person or organization. Being a fiduciary involves putting their client’s interest ahead of their own. The definition of a fiduciary has been an evolving topic of discussion in the financial advisory space for several years now. Attorneys, trust officers and financial advisors are among the professionals who may be required to act in a fiduciary capacity. NAPFA is a leading organization of fee-only financial advisors that requires its members to . Fiduciary duty vs suitability standard
As financial advisory industry expert Michael Kitces said in a recent tweet, “Suitability means selling a suit that fits you. Fiduciary duty means that it has to look good on you, too.” An investment or financial product that is suitable may not be appropriate for your unique situation. Suitability means that a financial product is suitable or may be a good fit for somebody in your general situation. This might be defined as someone who is the same age and marital status as you are, and whose income is roughly similar to yours. An advisor adhering to their fiduciary duty to a client takes this a step further and does due diligence to help ensure that any investment vehicle or financial product is appropriate for their client’s unique financial situation. This takes into consideration their client’s goals, and other investments. In choosing a financial advisor to handle your unique financial situation, you should decide if someone who gives generalized recommendations that may be appropriate for your broad situation is what you are looking for, or if you want an advisor who takes their duty of care seriously and tailors their financial advice to your unique needs. In other words, is a suit that just fits OK, or do you want one that looks good on you? What is the difference between a fiduciary and a financial advisor
Essentially, someone can be a financial advisor but not be a fiduciary. Investment advisors registered with the U.S. Securities and Exchange Commission (SEC), as well as with many states, have a fiduciary duty to their clients. They are obligated to put the interests of their clients first and to disclose any conflicts of interest that could influence the advice they give. Many advisors working through broker-dealers may not be held to a fiduciary standard, but rather to the less stringent Regulation Best Interest standard, or Reg BI, as set forth by the SEC. The SEC says that this regulation imposes a standard of care on broker-dealers. These regulations do have some components of the fiduciary standard, including the duty to disclose potential conflicts of interest that could influence the advice they provide to clients. Why it s so important to work with a fiduciary financial advisor
While every investor should do what they feel is best for them, working with a financial advisor who is a fiduciary would be a wise decision. At a basic level, why would you want to work with an advisor who does not have an obligation to act in your best interests? In choosing a financial advisor, you will want to . “How are you compensated?” Ideally, you should seek out advisors who are fee-only. This means that all compensation they receive is paid by their clients, not by the providers of investment and financial products. Financial advisors are human, and they can be tempted to sell clients financial products that offer the highest compensation to them, whether or not these products are the best choices for their clients. “Are you a fiduciary? If yes, will you put this in writing?” Any advisor who is truly a fiduciary advisor will gladly do this, often without you needing to ask. If an advisor claims to be a fiduciary but is hesitant to put that status in writing, that should be considered a huge red flag. “Are there any conflicts of interest that you have that would preclude you from providing advice that is totally in my best interest?” A conflict of interest could be a requirement that the advisor’s firm may have as far as using certain types of required investment products for clients. To be clear, determining if a financial advisor is a fiduciary is only a step in the process of for your situation. There are excellent advisors who are not fiduciaries that care deeply about their clients and do an outstanding job. There are also advisors who are fiduciaries who may lack the knowledge and experience in dealing with clients in your specific financial situation. Nonetheless, determining whether an advisor you are considering is a fiduciary is an important step in the process of choosing a financial advisor. A good analogy to think about here: Would you knowingly use a doctor who only prescribes medications where they receive a kickback from the manufacturer regardless of what the actual best medication might be for your condition? Of course not. The same principle applies in choosing a financial advisor. All else being equal, you should generally lean towards using a financial advisor who is a fiduciary. SHARE: Roger Wohlner is a contributing writer for Bankrate. Brian Beers is the managing editor for the Wealth team at Bankrate. He oversees editorial coverage of banking, investing, the economy and all things money. Related Articles