Is Your Financial Advisor a Fiduciary?

In interviewing a financial advisor, you will always need to ask if she is legally obligated to act in your best interests at all times. If so, she should put that in writing.

If an advisor claims to be a fiduciary but is not willing to put that on paper -- which would force him or her to stand behind their word in court -- run away. An advisor who acts like a weasel before he has your money to work with is sure to turn into a rodent once he gets your cash.

That said, you may still be interested in working with advisors who are not fiduciaries.
If, for example, you have an existing relationship with a stockbroker, and he or she has done good work on your behalf, you may be completely comfortable taking his or her advice going forward.

There's nothing inherently wrong with an advisor who does not agree to live up to the fiduciary standard; it's just that you need to be aware of the potential conflicts and be on guard at all times when working with that person. "On guard" does not mean you'll lose sleep every night wondering whether he is about to rip you off; it's more like reminding yourself, every time he gives you a recommendation, to make sure that he has kept his interests aligned with yours, so that his vision of "appropriate" equals your version of "best."
By Chuck Jaffe
Chuck Jaffe is a senior columnist and host of two weekly podcasts at MarkWatch. He has also been a guest speaker on several television and radio shows.

Copyrighted 2019. Content published with author's permission.

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