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Defining the Fiduciary Financial Advisor

What is a fiduciary financial advisor and why is hiring one to help you with your investments and finances important?


First, a fiduciary is a person or organization that acts on behalf of another, to which that fiduciary owes duties of faith and trust. Being a fiduciary or having a fiduciary duty requires that an advisor act in the best interests of their client.  Most commonly, a fiduciary manages the assets or money of someone else. When you are looking for a financial professional to manage your money without conflicts of interest, it is wise to determine whether they have a fiduciary obligation to act in your best interest.


The Fiduciary Difference

“A registered investment adviser's fiduciary duty is a higher standard - to serve the best interests of their clients...”

A fiduciary is a person or entity acting on behalf of someone else who cannot legally breach their fiduciary duty. Having a fiduciary duty entails the highest standard of care in equity or law, and those who breach their fiduciary duty can be taken to court.  They can be paid through fees on assets they are managing so are motivated to increase their clients’ assets by making smart investment decisions. 


Brokers Work for Brands


Brokers are agents or representatives of the broker-dealers they work for and are only required to determine that their recommendations are “suitable” for their clients, given the clients financial situation and tolerance for risk.  They are paid by commissions on the purchases and sales of investments so are motivated by doing transactions.


A registered investment adviser’s fiduciary duty is a higher standard - to serve the best interests of their clients, which is a stricter legal standard under laws that are enforced by the federal government (SEC) and state investment/insurance divisions.


Some professionals are a combination of both agents/reps and fee only fiduciary financial advisors.  They are considered to be “dual registered” through both FINRA and SEC/State regulators. They have a duty to disclose when they are acting as an agent and are receiving a commission for services/products that they are offering to you.  They still have a fiduciary responsibility to act in their clients’ best interests.


Next Steps


If you are interested in working with an investment professional who is a fiduciary, please consider contacting us to inquire about our financial planning and investment management services. We are a fiduciary located in Des Moines, IA serving clients across the U.S. You can email us at invest@taberasset.com or call us at 515-557-1860.

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