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Do you know what a fiduciary is?
As it turns out, most people don't, either
What is a fiduciary?
The term “fiduciary” has been a buzzword in the financial community for the last few years. Most know that it’s a term that is sometimes used to describe financial advisors, but there’s actually much more to it than that.
The word “fiduciary” has been around since Roman times, but it really started getting attention with the DOL Fiduciary Rule and subsequent SEC Regulation Best Interest. These rules have changed the industry and prompted financial advisors to take their customer service to the next level. Gone are the days when advisors simply recommend stocks or other products and collect a commission on them. Now, a fiduciary financial advisor must focus on providing the ultimate customer experience by developing a deep relationship with their clients so that their advice and recommendations are tailored to their clients’ interests.
But what is a fiduciary financial advisor, truly – what makes this type of financial advisor so different from the others? As the financial advisory field has grown and changed with the economy, so, too, has the definition of the role.
We hit the streets of San Diego to see if the “average” person knows what a fiduciary is. What we found was that people were clearly, well, unclear on its meaning.
Fiduciary financial advisors
Now, we can finally offer a fiduciary definition: A fiduciary is an independent registered investment advisor who doesn’t answer to a company with their own agenda in what you buy. They are not a broker selling you products. Instead, a fiduciary financial advisor answers to the law, which requires them to put your interests first and to remove (or at least disclose) any potential conflict of interest. Being a fiduciary involves more than just being a financial advisor: A fiduciary is a person who holds a legal or ethical relationship of trust with one or more other parties.
What is a fiduciary financial advisor?
A fiduciary offers what maybe you thought you had all along – conflict-free advice. This is essential because conflicted advice, backdoor payments and hidden fees are costing Americans about $17 billion per year, according to the President’s Council of Economic Advisors. That’s about 1% of your returns being gobbled up. Although 1% may not sound like much, a 1% reduction in fees can mean your money will last nearly a decade longer during retirement.
When you work with a fiduciary financial advisor, the emphasis is on the relationship – not the commission. In most cases, you pay them a flat fee for their advice, which means they have no incentive to sell you products that provide them a commission. The goal of a fiduciary is the same as yours: to help you achieve financial freedom and unlock an extraordinary life.
How to find a fiduciary financial advisor
Do you want to learn about concepts such as the importance of diversifying your investments and how to effectively plan for your financial future? If so, you need to know how to find a fiduciary financial advisor. Ask around to family and friends to see if they’ve found a fiduciary they trust. You can also work with a business or life coach who can point you in the right direction or learn more about choosing a fiduciary. And if you’re ready to truly dive into how your finances feed into other aspects of your life, attend Life & Wealth Mastery, where you will revitalize your body, mind and finances toward a life of wellness and prosperity.