Looking to find a fiduciary investment advisor and wealth manager? Only fiduciary financial advisors are legally bound to act in your best interest at all times. Finding the right advisor can seem daunting, but here are several resources to help you find the right investment advisor for your situation.
A fiduciary investment 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.
Registered investment advisors are the only type of financial advisor that acts as a full-time fiduciary.
Stockbrokers, insurance agents, and other types of advisor-sales roles don’t always have to act in your best interest depending on the situation. 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.
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.
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.
How to Find a Fiduciary Investment Advisor
There are several ways to find a fiduciary investment advisor. Because it’s a big decision to partner with a financial advisor, consider including a few different methods in your search.
Starting with the obvious: Google
One of the harder aspects of finding the right financial advisor is knowing what you’re looking for. If you Google financial advisor near me you’re going to get a wide range of advisors in your area. 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. In this case, Google can be a terrific way 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, but technology makes it easy to meet face-to-face, even if we are in separate locations. When searching for a fiduciary financial advisor, consider prioritizing the right complete fit over an office location near you.
After all, 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 can be limiting. For several reasons, many fee-only investment advisors (and fiduciaries) may choose not to become members of NAPFA. Therefore, it’s important to search more than one website for an investment advisor.
Referrals from friends, family, and co-workers
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.
SEC’s advisor search
The SEC 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.
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 LPL 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:
A fiduciary investment advisor
Fee-only financial advisor
SEC-registered investment advisor
CERTIFIED FINANCIAL PLANNER™ professional advisors