What It Means To Be A Fiduciary

Through the multitude of great conversations we have every day, we’ve noticed a trend – while we are proud to have the word “fiduciary” and the responsibilities it entails at the heart of our firm, many people simply don’t realize that there really are financial professionals whose singular focus is helping their clients, full stop. In fact, we often get asked exactly what the word “fiduciary” means, or hear from people who are under the impression that it is nothing more than a synonym of “financial.” Not so!

A true fiduciary is one who has responsibility to another party in an ethical sense as well as a legal one, bound to care for the finances of their clients purely for the sake of the client. A fiduciary upholds a “prudent person standard of care,” meaning that they must measure any action first by questioning the value of that action to their client. In the modern idiom, financial professionals who choose this path are held to what is called the fiduciary standard, a charge to put the interests of the client ahead of the interests of the advisor in every decision.

The issue of objectivity is one of the most critical factors anyone should use in selecting a financial advisor, and conflicts of interest or profit motives can stand in the way of getting the objective advice you need. One thing we see often in talking with people who aren’t familiar with fiduciary services is examples of individuals putting their money, and their trust, behind commissioned brokers – who ultimately are in the business of profiting from the sale of investments. Complicating matters further, many firms are now moving toward a “hybrid model” in which their representatives can work both as an investment advisor representative and a Registered Representative (an agent in the buying and selling of securities), a phenomenon known in the industry as dual registration. This allows individuals with both qualifications to either offer investment advice to their clients or receive commissions from transactions they suggest – which can make it more attractive to push investments that carry higher fees than to suggest ones that are simply aligned with the goals and risk tolerance levels of their customers. A good rule of thumb: if the best advice any given person can offer you is to buy something from them, at the very least you should get a second opinion.

BFA Wealth Management has a business model created very deliberately to reflect the level care we take of our clients in all of the work we do. Our company is structured such that we are bound by law to be completely objective. We cannot profit from the sale of any particular financial product, and indeed we do not sell securities at all. We don’t believe that a commission-based-sales model promotes the sound advice and genuine attention to detail that our clients deserve. We do not – in fact, we cannot - earn commissions, and we are not affiliated with any third-party brokers.

Our advice is influenced only by our knowledge of financial markets and our knowledge of our clients’ unique situations, goals, and plans. That’s what it means to be a true fiduciary.

In finance and in the rest of our lives, we believe in treating others as we would want to be treated, and we do business accordingly. No commission or bonus is worth more to us than the integrity of the relationships we have with the individuals we serve. If you want to work with a true fiduciary, get a second opinion about a major financial decision like rolling over your 401(k), or simply get a complimentary financial analysis to see how well your current plan aligns with your goals and your risk score, contact BFA Wealth Management today. Let’s talk.