Episode #1: What Is A Fiduciary?

Today’s Prep:

On this inaugural edition of the Retirement Ready podcast, we’ll explore the meaning behind the fiduciary standard.

(Click the featured times below to jump forward in the episode)

Equipping Points:

1:58 – What Is The Fiduciary Standard? 

  • A fiduciary is someone who acts on behalf of someone else to manage their assets. They act in good faith in trust. Quite simply, this means they’re supposed to represent your best interests. Recently, we’ve heard a lot about this term as it pertains to financial advisors, but lawyers, CPAs, and executors of estates are all supposed to operate as fiduciaries as well.

3:18 – Not Everyone Is A Fiduciary. 

  • You’d think all financial advisors would operate in your best interest. “Do Unto Others…” Right? Believe it or not, not all advisors operate as a fiduciary. Other folks in the financial industry operate under the suitability standard. This means that as long as you have the knowledge and the assets available to sell a certain product, you don’t have to disclose to your clients whether there’s a more cost-effective option. Under this standard, advisors also don’t have to disclose any conflicts of interest to you as the client (I.e Getting a commission for meeting a sales quota or taking a large position in one product as a company). In other words, as long as a product is “suitable,” advisors can sell it. It used to be that only registered investment advisors worked as fiduciaries in the financial services industry, but more and more folks are beginning to adhere to that standard.

5:13 – How Do I Know If Someone Is A Fiduciary?

  • If someone says they’re an investment advisory representative of a registered investment advisor, they are most certainly a fiduciary. You also want to look at the disclosures and tag lines from your advisor. If they read “securities offered through….” and list out a broker dealer, they’re also on the fiduciary standard.

Other Preparation:

  • 5:47 – Suitability Isn’t Necessarily Bad.
  • 8:29 – Suitability Versus Fiduciary.

Today’s Takeaway:

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The host: Eric Peterson - Contact - Call: (515) 226-1500

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