12 Oct Are You Working With a Fiduciary?
Simply put, a Fiduciary has a legal responsibility to act in our client’s best interest, similar to a medical doctor’s responsibility. How do you know you are working with a Fiduciary? Fee-Only Registered Investment Advisers like Cochran Wealth have a legal fiduciary responsibility to act in our clients’ best interest. We get paid only by our clients and earn no commissions, kick-backs, or referral fees. There is no difference in how much money we make from the different investments that we recommend. At Cochran Wealth, one of our goals is to provide you the best conflict-free advice possible.
I understand how confusing this is. Banks will tell you that they are fiduciaries, that your money is being held by their trust department, and that makes them trustworthy. Maybe their back office trust department has that responsibility, but I can tell you that advisor’s goal is to sell you products that pay the highest revenue. An insurance policy can be an enormous payday for those advisers, landing the advisor with a paycheck worth tens of thousands of dollars in one day for a large policy. No matter how good that adviser is as a person, or how good they intend to be, there is an inherent conflict of interest in recommending products like that to you.
I understand how confusing this is.
Also, watch out for the wolves in sheep’s clothing. Some firms call themselves “Fee-Only”, but they are not. For example, they could have an insurance operation that is financially related. The insurance business has the potential to pay out massive amounts of compensation all upfront. The obvious conflict there is that your advisor recommends that you buy more insurance than you need, all because they make so much more money off of the insurance transaction. Imagine an advisor who thinks of their wallet more than helping you meet your retirement goals.
Also, watch out for the wolves in sheep's clothing.
Did you know that 9 of the top 10 'Fee-Only Wealth Management Firms' are not actually Fee-Only?
Did you know that 9 of the top 10 “Fee-Only Wealth Management Firms” are not actually Fee-Only? If you want to see the details, check out this fascinating article by respected financial planning blogger Michael Kitces: https://www.kitces.com/blog/9-out-of-top-10-cnbc-fee-only-advisory-firms-not-actually-fee-only-according-to-cfp-board-compensation-disclosure-rules/
Ask your adviser what their policy is on 'Steak Dinner Fees.'
Ask your adviser to show you the entire amount of fees you pay including upfront fees, back end fees, trading commissions, bonuses on their own company’s products, what I like to call “steak dinner fees”, and other hidden fees that you pay. Or just ask them what their policy is on accepting tickets, meals, transportation, lodging, etc., from product providers. Hopefully, your trusted financial advisor doesn’t give you the runaround when you ask.