The theme for this week is: how to pick a financial advisor.

Today, I’m going to share with you one of the most important criteria you should look for in a financial advisor, and it’s something that only a minority of financial advisors possess.

What is this important quality? Fiduciary status.

A fiduciary duty is the ethical and legal obligation to act solely in someone else's best interest. A fiduciary advisor must put the interests of their clients ahead of their own. This should be in writing and it’s the highest standard of care that exists between an advisor and their clients. You should ask to see this in writing, and I would argue that it’s a non-negotiable. This one criteria alone will eliminate many of the financial advisors on your short list.

It sounds like that a fiduciary duty should just be the table stakes when dealing with a financial advisor, but unfortunately that’s not the case. Most advisors do not operate under a fiduciary duty, which means the relationship can be one that includes conflicts of interest.

When there are conflicts of interest and a disordered set of priorities because a fiduciary duty isn’t part of the deal, it can erode trust, or cause your advisor to do things that are not in your best interest - like invest your money in a high fee product that pays them a fat commission. We want to eliminate those types of conflicts, and working an advisor who has a an obligation to put your interests first, who cannot legally receive commissions, eliminates many of those ethical pitfalls.

So ask your advisor if they are a fiduciary to you in all circumstances and ask them to put it in writing. If they are unwilling or unable to do that, you should think long and hard about whether you trust them to put your interests ahead of their own and avoid the sometimes lucrative conflicts of interest that exist when a fiduciary relationship is not part of your agreement.

That’s it for today! Thanks for listening.

My name is Ashley Micciche and this is the One Minute Retirement Tip.

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