6 Benefits of Hiring a Fiduciary Financial Adviser

What have you done to plan for your retirement? If the answer is “not much” or “nothing,” now is the time to start saving and investing part of your income, so you’ll have the money you need to retire when the time comes.

At Addition Financial, we often hear from members who want to know if they should hire a fiduciary financial adviser. While not everybody hires a financial adviser, there are some significant advantages to doing so – particularly if you haven’t done anything to get ready for retirement yet.

With that in mind, here are six benefits of hiring a fiduciary financial adviser now.

#1: Fiduciary Financial Advisers Must Act in Your Best Interest

It’s a common misconception that any financial adviser you hire is legally required to act in your best interest. Obvious exceptions like Bernie Madoff aside, it might surprise you to know that not all financial advisers are created equal.

The word “fiduciary” means the adviser in question has an obligation to be honest and act in good faith. That may mean recommending an investment that won’t earn them anything if it’s helpful to you. In other words, working with a fiduciary financial adviser provides you with peace of mind regarding your investments.

#2: Full Disclosure of Relevant Materials and Facts

Fiduciary financial advisers are registered with the Securities and Exchange Commission, which regulates their activities and may choose to penalize them if the adviser violates their standards. The most serious penalties are:

  • Revoke the financial adviser's registration
  • Bar the financial adviser from the financial industry or from multi-million-dollar disgorgements

One of the standards imposed by the SEC is that fiduciary financial advisers must disclose any information that’s relevant to an investment, which they define as anything that “a reasonable investor would consider to be important.”

In other words, working with a fiduciary means you’ll have the data you need to make the best possible investment choices for your needs.

#3: No Conflicts of Interest

Another requirement imposed by the SEC on fiduciary financial advisers is that they must actively avoid conflicts of interest when making investment decisions on behalf of their clients. That’s important for all the obvious reasons, but it’s also essential because fiduciary financial advisers have the authority to make investment decisions on their clients’ behalf – something we’ll talk more about later in this post.

In addition to avoiding conflicts of interest, your fiduciary financial adviser is also obligated to disclose any potential conflicts of interest to you, so you can decide what to do about them. You may decide to avoid an investment, or to limit your investment based on the conflict.

On a related note, fiduciary financial advisers may not use any client’s assets or investments to benefit themselves or other clients.

Expert Strategies for Setting and Sticking to Your Retirement Goals

#4: Make Investments on Your Behalf

If you don’t have the time or inclination to follow the stock market, track investments and make changes to your portfolio based on what you learn, then there is another significant benefit to working with a fiduciary financial adviser. Specifically, a fiduciary is someone whom you authorize to make investments on your behalf.

While this benefit might not appeal to some investors, there are some people who prefer to take a hands-off approach to investment planning. If you fit into that category, then working with a fiduciary financial adviser can save you time and effort as you entrust your adviser to make investment decisions for you.

#5: Navigate Major Life Events

We’d all prefer it if life were always predictable. Unfortunately, that’s not the case – and when you’re planning for retirement, you must have the flexibility to adjust to major life events like marriage, divorce and childbirth.

Working with a fiduciary ensures you’ll have the financial advice and guidance you need to adjust to life’s curveballs. Your adviser can help you fine-tune your adjustment strategy, account for changes in your circumstances and achieve major goals like buying a home or paying for your child’s education.

#6: Maximize Your Savings

The final benefit of hiring a fiduciary financial adviser is that their advice and services can help you maximize your savings regardless of what you’ve already done to save for the future.

It can be difficult for someone who lacks financial experience and training to understand investment strategies and choose the right options. Working with a fiduciary financial adviser means you’ll have access to constant guidance when it comes to saving for retirement, maximizing your earnings and achieving your most important financial goals.

Remember, you don’t need to be a multi-millionaire to hire a financial adviser. People at every age and income level can benefit from getting some financial advice.

Need help planning your future? Click here to learn about Addition Financial's investment services now.