What Is A Fiduciary?
“Fi-du-ci-ary – held or founded in trust or confidence. Applies to any situation in which one person justifiably places confidence and trust in someone else, and seeks that person’s help or advice in some matter (definition of fiduciary from merrium-webster.com)”
A couple of my kids are in the learning to read phase right now, learning to break words into syllables in order to pronounce them. We are working on the word “Fi-du-ci-ary” (what can I say, they have a financial advisor for a dad). Teaching my kids to read has been a very cool experience. I consider my kids my most valuable treasure, and I don’t just take anybody’s advice or help when it comes to my kids. We did our due diligence in seeking out the right pediatrician when our first child was born, only trusted them in the care of a few selected others, and only seek out the wisest people we know when it comes to getting parenting advice.
Trusting somebody for Financial Advice
There are several areas of our lives where we need to have a founded trust and confidence in someone else, where we need help and advice. Finances are one of these areas. Finances can be a very tricky subject to discuss, and information is only shared with one or two trusted people. We might be afraid of being judged for the state of our finances, or maybe embarrassed that you don’t know as much as you “think” other people know. A lot of the time they may have the same questions or concerns as you.
Finding the right person where we can share our financial information with, and trust their advice when it comes to finances can be a difficult task. Your finances are unique to you, so getting advice that worked for a friend may not work for your circumstances. For this reason, you may seek out a financial advisor. But financial advisors get paid to give you financial advice, so how do you know the advice is good and can be trusted?
Your Financial Advisor Should Be A Fiduciary - Not A Salesman
Your financial advisor should be a fiduciary not a salesman. Commissions earned from sales loaded mutual funds, annuities, and other insurance contracts create a conflict of interest that shouldn’t be ignored. A fiduciary wouldn’t recommend these products for most people because they aren’t in your best interest. The fees are high, performance often lags their benchmarks, and contracts can lock your money up for years with expensive termination fees. A fiduciary financial advisor will help you develop a financial plan based on your goals and your situation. This plan will be supported by a portfolio constructed of low cost, tax efficient investments because that is what is in your best interest.
How do you know if your Financial Advisor is a fiduciary?
Ask. That's the easiest way. An advisor should be quick and proud to state they operate in a fiduciary capacity(I am). Designations such as a CPA(Me), or CFP have professional requirements that holders of these designations must abide by. The advisor’s firm should be independent of any broker dealer relationship with no sales commissions. Advisors can distinguish themselves further by professional affiliations to organizations such as XY Planning Network (Dream Lake Financial is a member) that requires members to be fee only, no commissions.
At Dream Lake Financial, our business model is structured so that we only benefit if you benefit, our success is tied to yours. We operate on a fee only basis, which allows us to make recommendations based on what is truly best for you. If you want to know more about how we are different, schedule a call or send us an email. Your first introductory meeting is free.
Dream Lake Financial is a fee only firm, providing comprehensive financial planning and investment management.
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