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Do You Come First with Your Financial Advisor?

by Caldwell Trust

true fiduciaryCaldwell Trust Company serves as a true fiduciary meaning we hold ourselves to a higher professional standard. Over the past 12 to 24 months the term fiduciary has been mentioned in several articles due to the Department of Labor’s ruling on the Employee Retirement Income Security Act (ERISA) of 1974.  What you may not be aware of is how a fiduciary differs from a Broker or Financial Advisor as it relates to the management of your retirement funds or other matters.

The Fiduciary Standard

The Fiduciary Standard places a client’s needs first by requiring any professional acting in a fiduciary capacity to work solely on behalf of that client’s best interests. This standard applies to much more than finances; any professional position that acts on your behalf such as your attorney, real estate agent, or investment manager is held to the fiduciary standard.  


Non-Fiduciary vs. Fiduciary

When it comes to finances, a non-fiduciary financial adviser is regulated by the Financial Industry Regulatory Authority (FINRA), which holds a lesser standard known as “suitability.” Many brokers and planners work on commission or receive bonuses for selling certain products. In other cases, brokers and planners may be wooed by organizations that want them to sell their product into client portfolios, usually through extravagant events, trips, and dinners. Suitability requires them to provide advice that generally meets client needs, but does not require them to act solely in the client’s best interests.


On the other hand, a fiduciary is required to fully understand the client’s financial position, needs, and goals, and with those in mind, work with due diligence to make prudent recommendations that will best serve the client’s needs. They must charge reasonable fees, and those fees are never set as a commission. For instance, the representative you choose to handle your trusts will be guided by the fiduciary standard.


Why Hiring a True Fiduciary Matters

The recent DOL ruling for ERISA extended the fiduciary standard to any agents handling retirement accounts. The rule has already gone into effect, although compliance is not required until mid-2019. It’s important to understand that an adviser must act as a fiduciary in terms of your 401k or IRA, but may not be held to the same standard for other financial advice. That’s why it’s so important to carefully check an adviser and/or institution’s credentials — a true fiduciary will always act in your best interests.


Consider all the areas that need to be handled for your retirement planning. Ensuring you have a fiduciary for your 401k is a good start, but how will you handle the succession plan for your business? What if you want a diversified portfolio to support your retirement, and you’re looking at annuities? Do you want to relieve some of the burden from your family if you become grievously ill, or upon your death? These are all situations for which you expect a higher standard, so choosing a true fiduciary will ensure that standard is in place.


At Caldwell Trust Company, we emphasize our capacity to do genuine good for our clients and the people that matter to them most. We value an ethical approach that provides honesty and diligence without conflict or compromise. This integrity means you can trust us to help you with sensitive, painful, and difficult decisions.

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