What is a Fiduciary?
A fiduci--what?? A fiduciary is simply someone who obligates themselves to act in your best interest at all times. Like my CPA? Yep. My doctor? Yep. My lawyer? Yep. My financial advisor? Well, um, probably not.
Many investors are flabbergasted to learn that their advisor has not obligated themselves to act in their best interested in the same way as a doctor, CPA, or attorney do.
Why Aren't All Financial Advisors Fiduciaries?
The short answer is that the financial industry has primarily been a product sales industry since the beginning. However, things are starting to change.
A few years ago the Department of Justice proposed a rule that would require all financial advisors to act in the best interest of their clients' retirement accounts. The rule was a great step forward for our industry as it seeks to move from primarily financial product sales to the delivery of financial advice.
However, since the rule was proposed, there have been many political road blocks thanks to the great lobbying powers of Wall Street. Recently the DOJ Fiduciary rule was dealt another blow after a court in the 5th circuit ruled that the DOJ overstepped their authority with the requirement.
Investors Want to Work With a Fiduciary
Though the rule has been further delayed, the good news is that investors are waking up to conflicts in our industry and are beginning to vote with their feet.
Most of the industry's "advisors" are not obligated to act in your best interest at all times. Some will put on their fiduciary hat when it comes to your IRA, but they will take it off before they try to sell you an annuity. This would be like a doctor telling you that she will act in your best interest for your physical exam, but when it comes time to write the prescription, she no longer will and may recommend something that lines her pockets more so than another product that may be better suited for your problem.
Fortunately, we are seeing the tide of the financial industry turning towards the fiduciary professional relationship. "Financial Advisors" used to be stock brokers, then mutual fund and life insurance salesman, and now we are on the cusp of a future where (hopefully) all advisors will be in the business of delivering unbiased advice like other professionals.
How to Find a Fiduciary Financial Planner
In the wake of the Fiduciary rule being struck down by the 5th circuit court, many publications put out articles on how to find a financial advisor who WILL commit to acting in your best interest at all times. If you are looking for a fiduciary advisor, I would act quickly and be patient because they are in high demand. Many, such as our firm, have a waitlist due to high demand for our services.
Fiduciary Financial Planners in Saint Paul, Minnesota
You can search for advisors on sites such as NAPFA, XY Planning Network, or the Garrett Planning Network, all of which make it a membership requirement for advisors to be 100% fiduciaries. If you live here in Saint Paul, Minnesota you are in luck because there is a strong community of fiduciary financial planners in the Twin Cities. If you aren't sure whether your advisor has committed to act in your best interest or not, feel free to schedule an introductory phone call and I'll be able to tell you right away!