Over the course of your lifetime you’ll make decisions that may impact your financial future in ways you might find hard to anticipate. Purchase a home or rent? Start a new business? Loan a family member money? Each of these important decisions may have intended benefits but may also be made without understanding the underlying financial risks associated with that decision. Saving for retirement is no different. That’s why decisions regarding who to work with to invest your money is yet another critical decision that should be approached with great care.
Why do Fiduciaries care about this?
As licensed Fiduciaries responsible for a client’s assets, we are subject to something called the Uniform Prudent Investor Act (UPIA). Simply put, Fiduciaries must ensure assets are managed with a defensible risk/return that serves the best interests of their client. When we work with a particular investment adviser or broker on behalf of our client, we try to ensure they adhere to the Fiduciary Standard of investing as well. This might seem like an obvious choice but many investment advisers and brokers adhere to what’s called the Suitability Standard – investments that are suitable for a client but not necessarily in their best interests. An investment might be a good fit for your portfolio but might also generate large commissions or incentives for the broker.
How to Find an Investment Adviser who uses the Fiduciary Standard
Here in the Sacramento area, there are numerous choices for selecting an adviser to work with but how can you ensure a particular adviser adheres to a fiduciary standard? One of the tools I use to assist clients with the selection process is a guide published by the Department of Labor entitled How to Tell Whether Your Adviser is Working in Your Best Interest: A Fiduciary Guide for Individual Consumers. This short one-pager list of questions helps clients assess whether a potential advisor will act under fiduciary standards to ensure that your best interests are at the heart of all investment decisions. The guide also gives excellent guidance on assessing an adviser’s fees and licensing background.
Working with an investment adviser to manage and grow your portfolio, particularly for retirement, is one of the most strategic decisions you may make in your lifetime. At MoneyWise With Marybeth, we want to help you choose your adviser wisely so you can feel confident that your financial security is in good hands. Please contact us if we can help.