If you care about your money, you should memorize the word “fiduciary.” It’s critical if you hire someone to help with your finances. And with the Fiduciary Rule on the chopping block, it’s up to you to make sure your financial advisor acts in your best interest.
A Certified Financial Planner® once asked me to make sure I identified her as such for a story. “With the registered trademark and everything,” she said. I asked why that was so important, and she told me CFPs take a fiduciary oath to act in a customer’s best interest. When your CFP is a fiduciary, you know she’s there to help, not just sell you sub-par financial products.
Here’s the deal: non-fiduciary financial and retirement planners might suggest investments or other financial products that they get a kickback from, and that don’t perform very well. As we’ve told you before, the White House’s Council on Economic Advisers says that non-fiduciaries cost retirement investors $17 billion per year. CFPs aren’t the only financial service pros who take a fiduciary oath, though. Registered Investment Advisors (RIAs) are fiduciaries, too, for example. If you’re not sure, ask.
The bottom line: if you hire anyone to watch over your money, ask them one simple question: are you a fiduciary? If the answer is not a clear yes, it’s time to move on. While they might offer some legitimately good money advice, chances are, their primary objective is to sell you some kind of investment product, even if it’s not good for your wallet.
Also, keep in mind: some banks, credit unions, and investment services might offer you free financial help, too (as in the case of this Redditor, for example). The takeaway is the same—ask if they’re a fiduciary.
