Caldwell Trust Company – Building Wealth and Preserving Legacy Blog

Five Questions to Ask When Meeting with a Fiduciary Financial Advisor

Written by Caldwell Trust | Jun 6, 2022

Lots of people turn to fiduciary financial advisors to help them manage their finances and plan their futures. It's sort of like hiring an attorney—you'd never jump into court with a case you built yourself. There's no reason to rely on finances you've arranged yourself, either; a fiduciary has years of experience and helps their clients maximize their money.

 

If you've decided to work with a fiduciary financial advisor, there are some questions that can help you select the best one for your needs. Read on below to find out what sorts of things you should ask a potential fiduciary. 

 

Related Blog:  The Role of a Fiduciary Advisor

 

Five Questions to Ask When You Meet With a Fiduciary Financial Advisor

 

1. What can you share about your history? What is your track record?

If you want a great overview of a fiduciary's track record, it's easy:

  • Request a copy of Form ADV
    • Discloses potential conflicts stemming from securities trades
  • Request a risk-adjust performance record (that goes back a minimum of five years)
  • Request a list of client references (and actually call them)

The ideal fiduciary financial advisor will also share some information about their history outright. It will quickly become evident whether somebody is genuinely experienced or they're hooked on using buzzwords and pressure to convince you to partner up. 

 

2. What is your background? What are your strengths?

A fiduciary's background and experience will directly impact their ability to help you.

Lots of registered investment advisors hold advanced degrees-- do you think you'd prefer someone with more business education or a degree centered around finance? You'll need to speak with potential advisors to learn about their strengths and areas of interest.

Education isn't the only experience that can influence a fiduciary, either. Ask about their experience as a trader or investment analyst, too-- a fiduciary doesn't need this exact experience, but most qualified professionals will have it.  

 

3. Who pays you?

The source of your fiduciary's income matters.

  • Close to 100% of the compensation an investment advisor receives should come directly from his or her clients

If a financial advisor has other sources of income, they should be relatively insignificant-- and a fiduciary should never hesitate to disclose them. 

 

4. Who will actually manage my investments?

You should ask a potential fiduciary who will actually manage your investments if you decide to partner up. Here's the lowdown:

  • Real advisors keep funds in discretionary accounts; they may conduct transactions using mutual funds, ETFs, bonds, stocks, etcetera
    • This requires your trade-by-trade approval
  • Other advisors really just serve as middlemen between you and a "real" advisor; so if someone isn't directly handling investment research and management for you, they won't make a good fiduciary

 

5. Are you legally bound to act in my best interest? Are you acting as a fiduciary?

The only way to guarantee that someone is acting as a fiduciary is to ask as plainly as possible. If they ever answer anything other than "Yes," you are not speaking to a fiduciary.

  • If your investment advisor answers affirmatively, get it in writing
    • This is a legal precedent and fiduciary duty

 

Fiduciary Financial Advisor Services in Sarasota and Venice, Florida: Caldwell Trust

In the end, the relationship you have with Caldwell is something that can’t be duplicated by other firms.  Our management is local, our employees are local and our families are local.  Our business, community, and lifestyle are just as important to us as it is to you and your family. If you want to build a long-term relationship with an adviser that you know and trust, then choose a local financial advisor such as Caldwell Trust Company to work with you. 

Caldwell Trust Company is a Sarasota, Florida company that offers a variety of financial services to our community. If you are looking for an advisor with that local touch that takes true pride in their community, contact us to find out more.