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Of course the financial advisor you hire should have the right credentials. But here's what else they should have, and it's just as important as those credentials.
First, as a disclaimer, let's establish one thing here: credentials matter, a lot. Expertise, of course. Fiduciary? Absolutely!!! To understand the complexity of the financial world, to know what's available for clients, and to understand how each individual is different and has unique needs and goals... all of that takes schooling. And more schooling later on to stay current. And exams. It's not a profession for people who don't like to study and learn things, so let's just put that out there right now. Expertise is crucial in the financial advising profession. Credentials matter! Now that that's off our chest, we can say this: we can't stress enough how important the fiduciary standard is when it comes to hiring a financial advisor you can trust. Some Advisors Don't Take the Fiduciary Oath... Now for another disclaimer. While many consider the fiduciary standard to be a non-negotiable necessity for the advisor they hire, it's also true that there can be (and are) advisors who do not take the fiduciary "oath", but who serve their clients well. They are commission-based advisors, and make their money when they're able to sell certain products to their clients. It may sound dubious to you, but as long as the clients understand this and agree to that, the relationship does work for some people. They simply add one step to the process: they double-check every recommendation their advisor offers them. For them, that system works, and they don't mind the extra work. For the rest, however, the fiduciary standard is their way of knowing the financial advisor they hire is looking out for them in every possible way. Want Objective Advice? Hire a Fiduciary A fiduciary is obligated, by law, to hold your financial interests above their own. That means, when it comes down to a choice between two investments, for example, he or she can't choose one over the other simply because they get a cut when they sell that option. They'll be literally bound to choose the options that serve your financial interests the best. Most fiduciaries won't bother signing up for many commission-based programs, since they may not legally be able to recommend those products unless they're the absolute #1 best option for their clients. Instead, they usually charge a fee for their services, or charge their regular customers an annual percentage based on the total amount they're managing. These are called "fee-only" financial advisors (the other type are called "commission-based" financial advisors). So, What's the Take-Away? Commission-based advisors aren't thieves, of course. They're hard-working professionals who studied a long time to earn their credentials. They're simply working off a different structure than what many people are seeking these days. For those who want the officially-recognized beacon of trust in the relationship with their financial advisor, the fiduciary standard is an important thing to look for when hiring someone new.
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 Chris Hardy - CFP®, EA, ChFC®, CLU®,
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