Looking to find a fiduciary financial advisor and wealth manager? Only fiduciary advisors are legally bound to act in your best interest at all times. Here are five ways to you can find a full-time fiduciary investment advisor.
5 ways to find a fiduciary financial advisor
- Google search
- CERTIFIED FINANCIAL PLANNER™ website
- NAPFA website
- Ask friends, family, coworkers, or your tax and legal advisor for referrals
- Securities and Exchange Commission advisor search
How to Find a Fiduciary Financial Advisor
There are several ways to find a registered investment advisor (think full-time fiduciary). Because it’s a big decision to partner with a financial advisor, consider including a few different methods in your search. This article has more information on the benefits of working with a fiduciary.
Starting with the obvious: Google search for a financial advisor
One of the harder aspects of finding the right financial advisor is knowing what you’re looking for. A Google search for financial advisor near me returns over one billion results. The results can be overwhelming and not especially relevant for you.
But if you’re specifically looking to find fee-only fiduciary investment advisor, you’ve already narrowed your search considerably (a web search for fee-only fiduciary financial advisor near me still returns about 20 million results). Also consider adding other attributes that are important to you, such as a female advisor or advisor who helps a lot of doctors or business owners. With a specific search, Google can be a great starting point to gather a list of potential money managers.
A note of caution on near me searches. For many investors, the most important factor when trying to find an investment advisor is the location and proximity to where they live.
In-person meetings are ideal for some, but technology makes it easy to meet face-to-face from anywhere. When searching for a fiduciary financial advisor, consider prioritizing the right complete fit over an office location near you. For example, is there anything unique about your financial situation? If so, consider working with a fiduciary financial advisor that specializes in that niche. For example, at Darrow Wealth Management, we specialize in helping individuals after a sudden wealth event or windfall.
Regardless, if you move or your advisor does, you probably won’t want to start over with a new firm. Most SEC-registered investment advisors can work with individuals across the United States, which adds flexibility as your life changes in the future.
CERTIFIED FINANCIAL PLANNER™ website
The CERTIFIED FINANCIAL PLANNER™ professional designation is typically thought of as the gold standard for financial advisors.
In 2019, the CFP board announced CFP® professionals must adhere to a fiduciary duty when providing investment advice. Of course, what qualifies as personal investment advice is a big factor and another topic, but the CFP board has gone above most if not all other professional organizations in requiring advisors to put their client’s best interest first.
It’s important to note that the CFP Board’s fiduciary standard is business-model neutral as described below. So if you’re looking for a fee-only fiduciary investment advisor, you will still need to narrow down the results as the board allows fee-only and fee-based advisors.
From the website:
“Consistent with our mission to benefit the public, CFP Board supports a uniform fiduciary standard of conduct for all personalized investment advice. This fiduciary standard of conduct should put the interests of the client first, and should include both a duty of care and a duty of loyalty. Our position is grounded in the real-world experience of more than 87,000 CFP® professionals and the revised Code of Ethics and Standards of Conduct, effective October 1, 2019. The Code and Standards contains a genuine fiduciary standard of conduct that is broadly applicable yet business model-neutral, and includes both a duty of care and a duty of loyalty.”
You can search for CFP® professionals here.
National Association of Personal Financial Advisors (NAPFA)
The National Association of Personal Financial Advisors may come up in some of your searches for an advisor. NAPFA advisors are all fee-only financial advisors. However, if you’re trying to find a fiduciary investment advisor, you will need to do some extra homework to ensure the professional is also a registered investment advisor.
As previously mentioned, many fee-only advisors are also fiduciaries, but it isn’t a requirement.
NAPFA can be a useful resource for some individuals, particularly investors just starting out, but it’s not going to include all the firms in your search location. For several reasons, many fee-only fiduciaries (including Darrow Wealth Management) choose not to become members of NAPFA. Therefore, it’s important to search more than one website for an investment advisor.
Asking your other advisors, friends, family, or co-workers for referrals
A personal referral to a fiduciary financial advisor from someone you know can be one of the most effective ways to find an advisor, but it isn’t fool-proof. As discussed, due to the complexity and jargon of the industry, investors don’t always know if their money manager is a fiduciary or how they’re paid.
Personal referrals are especially helpful to get a sense of fees and services. Asking around can be a helpful starting point but consider doing your own research on the planner and firm before engaging.
If you’re working with a CPA for your taxes or have an estate planning attorney, consider asking them for a recommendation also. Those professionals will know your financial situation and should have an existing network that includes fiduciary investment advisors.
SEC advisor search
The Securities and Exchange Commission offers an online search for investors to research registered investment advisory firms or investment advisors by name. The database is most useful to do due diligence on an advisor, not necessarily to gather a preliminary list of names. But before moving forward with a fiduciary investment advisor, consider looking them up for background information, disciplinary actions, etc.
Do I Need A Financial Advisor Or Should I Do It Myself?
Asset Manager vs Wealth Manager: What’s the Difference?
Why should you look for a fiduciary investment advisor?
Only a fiduciary financial advisor has a duty to act in your best interest
A fiduciary duty is a legal requirement ensuring a professional (financial advisor, lawyer) acts in their client’s best interest. This is the highest standard of care under the law.
A registered investment advisor is the only type of financial advisory firm required to act as a full-time fiduciary. Darrow Wealth Management is a registered investment advisor. An employee of a registered investment advisor is called an investment advisor representative.
Stockbrokers, registered representatives, dual registered advisors, insurance agents, and other types of advisor-sales roles don’t always have to act in your best interest depending on the situation. Hybrid firms can switch between their status as a registered investment advisor and brokerage, which can be problematic for individuals seeking financial advice; wearing multiple hats makes it difficult to know when your advisor is acting as a fiduciary if circumstance requires it.
When a financial advisor isn’t prioritizing your best interest, how can you trust the advice?
Fee-only vs fee-based financial advisors
A fee-only financial advisor is only paid by their clients, typically as a percentage of assets under management (AUM). They do not sell financial products (like insurance or mutual funds) or receive commissions. Fee-only advisors also don’t accept compensation from third parties, like referral fees or other sales revenue.
How to Find a Fee-Only Wealth Manager
Fee-based advisors usually charge clients as a percentage of assets under management too. But they also receive commissions for selling financial products and securities to their clients. The commissions on these products can be substantial which can create concerns about conflicts of interest. This type of advisor can also receive referral fees and other third-party revenue.
A fee-based fiduciary?
While many fee-only financial advisors are registered investment advisors (and therefore fiduciaries), it’s possible for a fiduciary to sell products as a fee-based advisor or create a separate sister entity to direct this type of business. Typically, when investors are searching for a fiduciary financial advisor, they’re looking for a fee-only registered investment advisor.
Consider an independent fiduciary investment advisor
Independence is important when seeking financial advice. Independent wealth management firms and financial advisors have no affiliations or allegiances to a fund family or financial product. Advisors affiliated with a bank, wirehouse, or large asset manager might not be able to make a fully independent recommendation.
Consider this: you walk into a Bank of America branch and ask for the best type of savings account on the market. Would you expect them to suggest one of their accounts or tell you to go across the street to Santander?
Today, many investment advisors operate as a subsidiary of another larger, parent firm. For example, Merrill Lynch often has affiliations and partnerships with smaller firms or stand-alone advisors and LPL Financial is comprised of a network of advisors backed by the platform.
Affiliated advisors can still call themselves “independent” or a registered investment advisor, but they will still need to disclose the relationship, which is why it is always important to read the disclosures provided, such as the ADV. You can look up the ADV on the SEC’s advisor search website.
Darrow Wealth Management is proud to be:
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A fiduciary financial advisor
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Fee-only wealth manager
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Independent
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SEC-registered investment advisor
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CERTIFIED FINANCIAL PLANNER™ professional advisor
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