What is a fiduciary? If you have ever considered using a financial adviser, chances are you may have heard this term and wondered exactly what it means and why it’s important when choosing an investment adviser. Watch our short video to find out more about fiduciary obligations.
A fiduciary is defined as a person or organization that acts on behalf of another person, putting their client’s interest ahead of their own. A fiduciary advisor owes a duty, a fiduciary duty of loyalty to the client, and is expected to put the investor’s interest first and foremost and be above reproach in carrying out their duties. This relationship requires trust, good faith, and honesty, especially when managing something as critical as one’s wealth and retirement.
Surprisingly, not all financial advisers are fiduciaries. In fact, advisers at some of the biggest and most well-known firms are not fiduciaries. Does this make them bad advisers? No, not necessarily, but it does mean that they aren’t held to as high a standard, where conflicts of interest are true conflicts… if no one’s watching. And can sometimes invite bad behavior. Most financial advisors sell investments that are suitable for clients, but fiduciaries have a higher bar to clear.
So why is it important to know fiduciary vs. financial advisor duties? It’s important in the same way you hire a physician or surgeon. You are placing complete trust and faith in that doctor to do what is in your best interest. Compromises or unethical decision making by a physician can be very, very costly to your health. The same is true in the financial services industry. Why wouldn’t you want the peace of mind of knowing the person or company managing your financial health is bound by law to do what is right?
At Smith Anglin, we take our financial advisor responsibilities and fiduciary obligations very seriously. In fact, we embrace it. Going beyond the call and helping people who really need financial help is engrained in our culture. It’s simply a matter of getting to know the client, understanding their needs, then providing great counsel, advice, and expertise. For us, being a fiduciary means we are bound not just legally but ethically to help the client in any way we can. It’s defined by our standard of client care we exhibit each and every day.
As an independent registered investment advisory firm (RIA), Smith Anglin Financial falls under the Investment Advisors Act of 1940. We are “employed” directly by our clients, not by a brokerage house or securities firm. We hold to a fiduciary standard and put our clients’ interests first. Their priorities are our priorities.
If you are looking for an adviser who not only adheres to fiduciary duties and obligations, but is a true financial advocate for its clients, then please give us a call or schedule a personal consultation.