A financial advisor is a professional that helps you make financial decisions. They can provide investment advice, financial planning, income tax planning, retirement planning, and other financial services.
What Is a Fiduciary Financial Advisor?
A fiduciary is someone who holds a legal and ethical relationship of trust. A fiduciary financial advisor is registered with the SEC and required by law to provide financial advice based on the client’s best interest. A Registered Investment Advisor (RIA) is an example of a fiduciary financial advisor in Minneapolis MN. However, not all advisors are bound by the fiduciary standard. Brokers and insurance agents are not bound by a fiduciary standard of care. They are only bound by the suitability standard of care and therefore only required to give advice that is suitable for a client but not necessarily in the client’s best interest.
Advantages of Hiring a Fiduciary Financial Advisor
A fiduciary financial advisor is required to be transparent about any conflicts of interest that might arise. An advisor that is not a fiduciary is not obligated to disclose conflicts of interest.
When you hire a fiduciary financial advisor in Minneapolis, MN any conflicts of interest must be disclosed to the client. A broker or insurance agent that is not required to disclose conflicts of interest may receive commissions from the sale of financial products or other reward incentives for reaching internal firm sales quotas. These types of advisors may convince you to invest in products that are not in your best interest. A fiduciary financial advisor does not sell products or receive any commissions from the sale of products. Therefore, fiduciary financial advisors are independent and can make more unbiased recommendations.