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Simply put, a fiduciary is someone who is legally required to put your best interests first rather than their own. Fiduciaries sit above the “suitability standard” because they don’t just recommend products that are adequate; they make an effort to match you with the ones that will best enhance your personal situation. Under the lower 'suitability standard,' an advisor only needs to recommend products that are appropriate for your situation — not necessarily the best ones available
"Not all financial advisors are the same. It's important to know whether your financial advisor is a fiduciary — one of the highest standards under the law and a requirement that they act in your best interest rather than theirs,” says Jeffrey Snyder of the Broadcast Retirement Network.
Why It Matters To Your Wallet
A non-fiduciary advisor can legally earn commissions on the products they recommend, creating a built-in conflict of interest. For example, they could recommend a mutual fund with a higher fee to earn a larger commission rather than a less expensive one that saves you cash. Those differences compound significantly over decades.
“Are you a fiduciary 100% of the time?”“Is your fee structure fee-only or commission-based?” (Most fiduciaries are fee-only.)“Where can I see your credentials?” (Look for RIA (Registered Investment Advisor) status at investor.gov, or CFP designation via cfp.net)
Related: What Retirees Should Know About ChatGPT's New Personal Finance Tools
What To Do If They Aren’t
So now that you’re armed with this knowledge, your next step should be to set up a meeting and ask the hard questions. If you’re going to trust someone with your money, you should know what else is guiding their advice.
FINRA BrokerCheck (brokercheck.finra.org)SEC investor.govCFP Board (cfp.net)Jeffrey Snyder of the Broadcast Retirement Network.
Disclaimer: This article is for informational purposes only and does not constitute advice.
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