Wealth Management Blog | WrapManager | Hiring a Financial Advisor (2)

What's the difference between the Fiduciary Standard and the Suitability Standard?

Posted by Gabriel Burczyk | Founder & CEO

February 3, 2016

What's the difference between the Fiduciary Standard and the Suitability Standard?

Here’s a fact about financial advisors (NOT Investment Advisors) that may surprise you: they do not necessarily have to act with your best interests in mind. Please, take a moment to shake your head in disbelief. It’s ok.

Actually, it’s not ok! The way the law exists today, advisors and brokers can be classified in one of two ways. Either they give you investment advice according to the fiduciary standard, or they adhere to what's known as the suitability standard. It’s the latter one that can be problematic, and it’s also the growing subject of legal debate as the White House and Department of Labor consider new rules. Below, we broke down what you need to know now and what to look for ahead.

Your Retirement Planning Strategy: The Key Players

September 29, 2015

When it comes to a retirement planning strategy, no person is an island. The decisions you make regarding your retirement will affect other people, and their plans will affect your strategy. Therefore, it’s critical to consult with members of your family, your spouse, professionals you work closely with, and your financial advisor as you develop your retirement planning strategy. Let’s take a closer look at the reasons behind this collaborative approach to your retirement plan. Work with Your Spouse If you're married, the most important person you should consult with on your retirement plan is your spouse. Together, you have tackled financial issues for years, and together you’ll plan for the future. Whether or not your spouse has worked in the past will greatly impact your retirement planning strategy. How much will your spouse collect in Social Security payments? Does your spouse have a pension, 401(k), or IRA that you’ll need to factor into your strategy? How is your spouse’s health? Will your spouse’s health care impact your future financial needs? [+] Read More

Bill Gross’ PIMCO Departure – 4 Strategic Wealth Management Lessons

November 12, 2014

With much fanfare and a great deal of press, legendary bond investor Bill Gross shockingly announced his resignation from PIMCO on September 26, after 43 years with the company. Known as the “Bond King” for his track record managing the $222 billion PIMCO Total Return fund, Gross was leaving the company he helped found in 1971 and that he grew into a $2 trillion behemoth.1 Whatever the reasons behind his departure, it gives investors good reason to ask an important question: when the portfolio manager leaves a fund, should you remove your investments from the fund? The four considerations outlined below will help answer this important question. [+] Read More

New eBook! Finding a Better Financial Advisor

November 6, 2014

How do you know whether your financial advisor has your best interest in mind or is simply doing just enough to fulfill their basic duties? This is an important question to ask yourself because the security of your future depends on your retirement lifestyle planning, investing, and wealth management strategies. While you take care of the many different aspects of your life, your financial advisor can help look after your future. This is one of the many advantages of hiring a financial advisor. But not all financial advisors act as fiduciaries, putting your best interest at the forefront of investment decisions. Your retirement plans may not be as safe as you think if you have put your trust in a financial advisor whose motives are unclear or who is incentivized to recommend certain financial products. Our new eBook, Your Guide to Finding a Better Financial Advisor, can help you understand the very important question above: how do I know whether my financial advisor has my best interest in mind? And how can you find a better financial advisor? [+] Read More

3 Things Your Financial Advisor Isn’t Telling You

September 16, 2014

Your life is busy and full. You have your family and friends, your business, your hobbies and more. These fill up your days, leaving precious little time for other important cares like your finances. That's why you find a financial advisor, an expert who can steer you through the confusing world of investments, planning, and legal and tax ramifications while you focus on the other significant things in life. While you're taking care of these, your financial advisor can pay attention to the issues surrounding your investments and retirement plan. They can keep tabs on the markets, changes in legislation, investment pitfalls and opportunities, and more. That's the way it should be. Unfortunately there are financial advisors who neglect to tell you the whole story, including their fees, their shortcomings, and their loyalties. [+] Read More

Doctors Have the Hippocratic Oath - What About Financial Advisors?

August 7, 2014

The Hippocratic oath for doctors dates back 2,500 years, and it is credited to Hippocrates, the father of modern medicine. As far back as the oath reaches, it’s core meaning still remains today – a doctor must put the interests of every patient before their own.1 We think the same principle should apply to financial advisors. Someone who gives you investment advice should act in your best interests and place your interests ahead of their own. Importantly, that also means not making recommendations simply because they produce higher commissions for the advisor or their investment firm. Do Financial Advisors Have to Put Your Interests Before Their Own? Not necessarily. [+] Read More

Certified Financial Planners: 7 Qualities that Set Them Apart

June 2, 2014

When you’re thinking about hiring a financial advisor, here’s one tip to keep in mind: consider hiring a Certified Financial Planner professional. This special breed of advisor is required to take classes on various aspects of financial planning and has obtained a certification recognized as the standard of excellence for competent and ethical personal financial planning. CFP® professionals must meet several certification requirements, including extensive training and experience, and they are continuously held to rigorous ethical standards. As fiduciaries, they’re also ethically bound to make recommendations in your best interest. Here are 7 things you can and should expect your CFP® professional to provide and adhere to: 1) Professional and Responsible Your financial planner should take responsibilities seriously and place your interests over personal gain. The CFP® Board’s strict Standards of Professional Conduct is designed to ensure as much. [+] Read More

Financial Advisor Fees: Are You Paying Too Much?

February 27, 2014

Here’s a statistic that may catch your eye (or make it shed a tear): since 1980, total mutual fund assets have increased by 135 times, but the total expenses paid to equity mutual-fund managers has increased 141 times ($170.8 million to $24,143 billion).1 Have your investment fees, or the fees you pay to your financial advisor, been going up as well? 3 Actions You Should Take to Examine Your Investment Fees 1) Get a Clear Sense of What Your Investment Fees Actually Are Depending on what type of investments you have, the way you pay financial advisor fees can vary greatly. Mutual funds have “expense ratios” that might give you a good sense—but not always a clear picture—of what your fees are. [+] Read More

Don’t Hire a Financial Advisor Unless They Ask You These 7 Questions

February 26, 2014

In order to build someone a comprehensive investment plan, a financial advisor has to understand some of the intricacies of that person’s financial life, risk tolerance and goals. If a financial advisor focuses on the investments without understanding a client’s full picture, it could result in a subpar investment plan. Here are seven questions your financial advisor should have already asked you: 1) How is Your and Your Spouses Health? This question sets the stage for the length of time that a retirement plan might need to provide for you and your spouse, and it also will spur a discussion about potential medical expenses that might need to be factored into the investment plan. [+] Read More

What Investment Fees are You Paying? Use an Investment Plan to Find Out

February 25, 2014

Financial Advisors should run a detailed analysis of your current financial situation before creating an investment plan for you. Part of that analysis includes taking a look at your portfolio’s asset allocation and examining each investment’s purpose, efficacy, and cost. When was the last time you asked a third-party investment professional to take a look at your portfolio, examine its investment fees, and offer their thoughts? Get a Second Opinion on Your Current Investment Portfolio Like going to a doctor for a second opinion, it makes sense to have an investment professional (other than the one that advises you) take a look at your current portfolio and provide you with an analysis of what you pay in investment fees. [+] Read More