By Christopher B. Moore, CFP®
Have you ever read a financial article or blog post and put it down after reading the first paragraph because the terminology didn’t make sense? If so, you’re not alone. And while there is plenty of financial jargon that you don’t need to know to succeed financially, one term that is critical to how your money is handled is the word fiduciary.
The concept of a fiduciary can seem confusing to many, as most people assume that all advisors, whether they’re brokers or financial planners, are required to act as a fiduciary. But that’s not the reality. It’s important to understand the distinction between different types of advisors’ roles and what it means for you and your money.
The primary duty of a fiduciary is have a duty of care and loyalty, to put your needs first, and to provide advice and recommendations that will benefit you ahead of themselves. Think of a fiduciary as a trustee, someone who is given and accepts the responsibility of managing assets for someone else. This duty is essential for providing you transparency to potential conflicts of interest.
For example, fiduciary duty prevents an advisor from making an investment with your money solely for a kickback commission.
The fiduciary standard includes providing guidance that is objective and beneficial to you and charging fees that are transparent. The fiduciary standard can give you added confidence beyond the suitability standard that your hard-earned money is in good hands.
How Can I Know Who Acts As A Fiduciary?
While some advisors may toss the term around lightly, not all advisors are fiduciaries. Generally speaking, brokers, insurance agents, and real estate agents acting on the other party's behalf are not required to serve in a fiduciary manner. As they represent themselves or their company, they are held to a different standard regarding the financial products they recommend, rather than those recommended based on a fiduciary duty and standard of care.
Wall Street brokerage firms can sell proprietary products, so their advice may be biased. For example, annuities and other investments that are products of the same firms and provide brokers a higher commission can be recommended for your portfolio. Additionally, while brokers must inform clients that they’re choosing to be paid commissions, if the investor neglects to read the fine print, they may not know all the detail around the fees they are charged or potential conflicts of interest.
At Simon Quick Advisors, we are an independent firm committed to helping you reach your goals. Our approach to investing follows the highest fiduciary standards we set for ourselves. Our independence serves as a basis to create a specific investment strategy tailored to pursue your financial goals. Our advice is driven by our unwavering efforts to act in the best interest of our clients.
We are dedicated to providing you with the best advice we can give while being as objective as possible when analyzing your unique situation. We provide transparency and disclosure when it comes to our compensation or investment approach.
Why Should I Work With A Fiduciary?
There are several benefits to working with an advisor who serves in a fiduciary capacity. For one, they are open and transparent. Aside from the obvious goal of maximizing value for your money, working with a fiduciary will give you confidence that your advisor is working in your best interests in mind rather than their own.
By working with an advisor who is held to fiduciary standards, you can feel empowered to make the best decisions for yourself and your finances. Clients have the power to ask questions and to demand the highest value for the service that advisors are providing. As a firm in the financial world, we understand people’s reservations or even negative connotations toward the underlying motivations of some professionals. We want to assure you that you can trust in the fact that our relationship with you is built on integrity.
Your Next Steps
It’s important to thoroughly research an advisor before choosing to work with him or her. A financial professional should be open to sharing their business philosophy, how they choose investments, what their process looks like, any potential conflicts of interest they face, and how they’re paid.
About Chris Moore
Chris is a Managing Partner and Chief Investment Officer of Simon Quick Advisors based in Morristown, NJ. He joined the firm in 2004 as the third employee. Today, he sits on the firm's Management, Operating, and Investment committees where he provides guidance on the firm’s overall vision and strategy. He works closely with clients to develop financial plans and multi-asset class portfolios and has extensive experience in estate, retirement, insurance, tax, charitable, and investment planning. Chris graduated with a BA from the College of the Holy Cross where he majored in Mathematics and minored in Computer Science. He became a CERTIFIED FINANCIAL PLANNER™ in 2006 before going on to earn his MBA from Columbia Business School with a focus in finance and investments. Chris serves as an Advisory Board Member for Bow River Capital Partners, a private equity firm based out of Denver, CO, and he is a Board Member of the NJ chapter of the Young Presidents’ Organization (YPO), one of the world’s premier leadership organizations. Most recently, he became an Investor in Residence for the Benjamin Graham Value Investing Program at the UCLA Department of Economics. To learn more about Chris visit his LinkedIn.
Simon Quick is an SEC registered investment advisor with offices in Morristown, New Jersey; Chattanooga, Tennessee; and Denver, Colorado. A copy of our written disclosure brochure discussing our advisory services and fees is available upon request. References to Simon Quick as being "registered" does not imply a certain level of education or expertise. No information provided shall constitute, or be construed as, an offer to sell or a solicitation of an offer to acquire any security, investment product or service, nor shall any such security, product or service be offered or sold in any jurisdiction where such an offer or solicitation is prohibited by law or registration. Additionally, no information provided in this report is intended to constitute legal, tax, accounting, securities, or investment advice nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. Past performance may not be indicative of future results. Different types of investments involve varying degrees of risk. It should not be assumed that future performance of any specific investment or investment strategy will be profitable, equal any corresponding indicated performance level(s), be suitable for your portfolio or individual situation, or prove successful.