When you visit a doctor, you probably assume that he/she must do what is in your best interests and not what maximizes that doctor’s income. And you would be correct. Unfortunately, the same cannot be said with financial advisors. Being a fiduciary means that an advisor must legally put the client’s interests first, ahead of the advisor’s interests. This seems pretty basic to us at Greenspring – we have been following the fiduciary standard 100% of the time for 100% of our clients since our founding over 12 years ago.
However, the majority of advisors are not fiduciaries 100% of the time. There are several methods and loopholes to avoid being a fiduciary. You may have recently seen in the news that President Trump has ordered a review of a rule requiring the fiduciary standard with certain retirement accounts. Even if this rule does end up going into effect, it still only impacts those retirement accounts, not all accounts or investment products pitched by advisors. Also, advisors are allowed to register with the government in a few ways, which lets them be fiduciary when it comes to some activities but not fiduciary when it comes to others.
Due to these complexities, our recommendation is to utilize a fee-only advisor such as one found at www.napfa.org (an association of fee-only advisors). Fee-only advisors are already subject to the fiduciary standard in all situations for all clients.
So the next time you see a financial advisor, ask them – Are you a fiduciary 100% of the time, or only when the government requires you to be? You might be surprised at the answer.
