More than nine in 10 Americans think it is important for financial advisors who dispense retirement advice to act in the clients’ best interest. And more than half of Americans think this logical assumption is in fact legally required within the financial service industry.
That means that more than half of Americans are wrong, wrong, wrong.
Not all financial advisors put clients first. And that’s totally legal. The only requirement for many advisors is that they recommend “suitable” investments and products for their clients. There is a lot of room for interpretation between what is best and what is suitable.
The Best Advice
A smaller cadre of advisors adheres to the higher “fiduciary” standard. A fiduciary vows that all recommendations are indeed in the best interest of the client. As far as I am concerned if you want to work with a professional advisor, you better check that you are working with someone who acts as a fiduciary.
And sadly, you may not be getting any federal help on that front. A regulation that would have required all advisors dispending retirement advice to act as a fiduciary was to go into effect last month, but has been delayed by the Trump Administration.
What a mistake. For all the hand wringing about how to help more Americans be able to retire comfortably, it is so frustrating that there is not bipartisan support for making sure the customer-not commissions or fees-always come first when an advisor is offering retirement advice.
Again, if you are working with an advisor, or anticipate hiring someone in the future, I insist that you ask to get in writing that the advisor will be acting as fiduciary. The word “fiduciary” must appear in that document, and the advisor must sign it. A true fiduciary will have no problem doing that for you. Anyone who balks is someone you should not work with.
And while I think it is fine to work with a financial advisor who is a fiduciary, I want to be very clear. The very best financial advisor is the person staring at you in the mirror. How your money is invested, spent and saved impacts you more than anyone else. With so much on the line, it makes no sense to not be engaged and on top of your finances. And don’t you dare tell me it’s too complicated, or hard, or you’re not good with numbers. Building financial security does not require a business or accounting degree. At my website you can find articles and tools to help you build lasting financial security.