Are you looking for high-quality financial advice but won’t take a chance on an unreliable advisory service? Then you probably need an experienced fiduciary wealth management firm. If you’re a high net worth investor, consider hiring Pillar Wealth Management, a high-profile company serving investors with $5 million to $500 million in liquid assets. If your wealth exceeds $5 million, get started by reading our guide titled 7 Secrets to High Net Worth Investment Management, Estate, Tax, and Financial Planning.
STRATEGIES FOR FAMILIES WORTH $5 MILLION TO $500 MILLION
7 Secrets To High Net Worth Investment Management, Estate, Tax and Financial Planning
The insights you’ll discover from our published book will help you integrate a variety of wealth management tools with financial planning, providing guidance for your future security alongside complex financial strategies, so your human and financial capital will both flourish.
Clients frequently share with us how the knowledge gained from this book helped provide them tremendous clarity, shattering industry-pitched ideologies, while offering insight and direction in making such important financial decisions.
Meanwhile, this guide will offer you insight into the best fiduciary wealth management firms. To start with, let’s find out which financial advisors are fiduciaries.
Table of Contents
Which Financial Advisors Are Fiduciaries?
The term “financial advisor” is very broad. It applies to different types of financial professionals, including investment managers, stockbrokers, insurance agents, and wealth managers. Different types of financial professionals follow their own set of regulations. Those offering investment services are divided into three categories of professionals, namely:
- Broker-dealer agents, who buy and sell securities for companies or individuals.
- Registered investment advisor representatives, who only provide investment-related advice to clients on an ongoing basis.
- Dually registered financial professionals, who are registered both as an investment advisor representative and a broker-dealer agent. On some accounts, the expert will act as a broker-dealer agent, and on others, as an investment advisor representative.
But returning to our initial query, which of these professionals are fiduciaries? Registered investment advisor representatives are required to work in the best interests of their clients through their relationship with them. They cannot prioritize their own interests or those of their employer over their clients’ at any point during the relationship. In other words, these professionals are subject to the fiduciary standard.
On June 30, 2020, the Regulation Best Interest came into effect. Based on this regulation, broker-dealer agents must also operate in the client’s best interest when working with retail clients and when they’re providing advice to clients.
This obligation is different from the fiduciary standard in that it requires that the client’s interests be prioritized only when offering expert advice or making a recommendation. While no definite parameters exist regarding what’s referred to as a recommendation, the SEC mentions that factors that help determine whether a recommendation has been given include whether the communication reasonably influenced the investor or client to buy or sell a specific security and acted as a call to action.
Thus, broker-dealer agents must abide by Regulation Best Interest at all times, including when working with retail clients. In contrast, registered investment advisor representatives must comply with the fiduciary standard at all times.
As for the dually registered financial professionals, they are expected to follow the fiduciary standard when serving as a registered investment advisor representative, but if they act as a broker-dealer agent, they must abide by Regulation BI. To learn more about which financial advisors are fiduciaries, conduct a video consultation meeting with our wealth managers at your convenience.
This brings us to the issue of how a dually registered financial professional would market themselves. Can they call themselves a fiduciary? It can be difficult for clients to figure out the status of the person they’re hiring. If you’re a high net worth individual looking to hire a fiduciary, you can simply ask the advisor whether they’ll act as a fiduciary for all your accounts at all times. Then confirm this by checking the disclosure statements, including the Form CRS of the firm.
Also, a professional who is merely a broker-dealer cannot market themselves as a financial advisor. They can only use the term “financial advisor” in their marketing materials if they are both a registered investment advisor and a broker-dealer. Hence, a dually registered financial professional serving a client with multiple accounts can act in different capacities on different accounts. They may be a broker-dealer on one account and a registered investment advisor representative on another. If you’re a high net worth investor with wealth exceeding $10 million, this guide will offer deeper insights into fiduciary advisors.
Now that you’ve gained a profound understanding of which financial advisors are fiduciaries, let’s address your next concern: “Is a financial advisor better than a fiduciary”?
Is a Financial Advisor Better Than a Fiduciary?
While “financial advisor” is a generic term that includes both fiduciary and non-fiduciary advisors, it’s sometimes used to refer to non-fiduciary advisors only. So, when you ask if it is better to hire a financial advisor than a fiduciary, it really means you’re choosing between a fiduciary and a non-fiduciary advisor. Thus, to make an informed decision, it’s critical to understand the difference between a financial advisor and a fiduciary.
The Difference between a Fiduciary and a Financial Advisor
In legal terms, a fiduciary is an advisor who acts in the best interest of clients, with whom they form a bond of trust. The fiduciary standard is a legal obligation to prioritize beneficiaries’ interests over their own. Professionals, firms, and banks can all serve as fiduciaries.
Examples of professionals serving as fiduciaries include real estate agents, trustees, attorneys, corporate officers, certified financial planners (CFPs), chartered financial analysts (CFAs), and wealth managers. The fiduciary relationship between these professionals and their clients demands high levels of good faith and trust. To learn more about fiduciary financial advisory services, go through our book titled 7 Secrets to High Net Worth Investment Management, Estate, Tax, and Financial Planning.
A financial advisor, on the other hand, is an expert who develops a plan for helping you accomplish your financial goals. Using their help, you can learn to invest wisely, minimize your debt, and save more in ways that you may not be able to achieve on your own.
Although these advisors possess greater expertise and knowledge about financial services than ordinary individuals, they may not necessarily be legally liable for your money, like fiduciary advisors. For these experts, whose relationship with clients is non-fiduciary, the designation “financial advisor” is merely a job title and won’t imply a fiduciary relationship.
Examples of such financial advisors include financial planners, investment managers, and consultants.
Based on the difference between a financial advisor and a fiduciary, your financial interests should be better protected with a fiduciary, making it a better choice. To learn more about whether a financial advisor is better than a fiduciary, schedule a video consultation with our wealth managers at your convenience.
It’s important to clarify a misconception here. Insurance agents are sometimes incorrectly referred to as fiduciaries, which is not accurate because they typically sell you a product and will almost certainly prioritize their interest over yours. Most insurance agents earn a commission, so they naturally have a monetary motivation to sell their products with profitability in mind.
By now, you should be in a much better position to decide whether to hire a financial advisor or a fiduciary. Let’s find out which is the best financial advisor company, or what makes a great advisory company:
Which Is the Best Financial Advisor Company?
Before you can have a satisfactory answer to this question, it’s important to understand what makes a financial advisory company great or define the characteristics of a great financial advisory company.
How Diverse Is Their Range of Services?
Your current financial needs may be very different from what you may target one year, five years, or ten years from now. So, it’s important to inquire about the breadth of services offered by your wealth manager. As your financial picture changes and grows over time, a financial advisory company that offers a full range of wealth management capabilities should be better able to facilitate you in achieving your goals.
It has to be a firm that does provide traditional investment opportunities but, at the same time, is flexible in fiduciary matters and can hold assets in trust in several asset classes. Similarly, as you develop tax-efficient strategies during estate planning, your financial advisory company should possess trust situs capabilities that relate to where your trust is domiciled.
Hence, you should hire a financial advisory company that will not just address your existing needs but also have you covered in the long run. If your wealth exceeds $5 million, you can learn more about the full range of fiduciary wealth management services by studying our guide titled 7 Secrets to High Net Worth Investment Management, Estate, Tax, and Financial Planning.
What Is Their Business Model?
The business model of a financial advisory company matters a lot to clients. How they serve you will greatly depend on the structure of their platform, whether they’re privately or publicly held, and their core business strategy.
For instance, quarterly returns pressures are common for publicly held firms, which may impact the timing and types of investments presented to you. Likewise, a company with proprietary investment vehicles has its fees tied to these vehicles, so it’s no wonder that a conflict of interest exists when working with that company.
Besides, some companies offer financial advisory services, but their primary business is dedicated to insurance, banking, or lending. Consider hiring a company whose sole focus is financial advisory services. This way, the company’s business model will be better aligned to match your objectives, thereby offering better quality advice. To obtain deeper insights into what type of financial advisory company you should hire, schedule a video consultation with our wealth managers.
What’s Their Investment Approach?
A financial advisory company’s investment approach is another key area to explore. To have an idea of their approach, you need to dig into its investment offerings, its historical investment performance, whether they provide internal/proprietary investment opportunities or have outside advisors involved, whether the company utilizes individual securities or mutual funds, and whether or not the overall investment approach is model-based or is personalized to the client.
The answers to these questions will help you understand whether your potential financial advisory company offers a wide enough range of investment opportunities and the costs associated with them. When taking into account the various factors that affect your after-tax returns, such as account management fees, fees embedded in the investment, and capital gains, you should understand not just the fee structure but the actual cost of the investments.
This is our take on the best fiduciary wealth management firms. To summarize, fiduciary wealth management firms are much more reliable and safer to hire than non-fiduciary financial advisors. If you have spent all your life earning the wealth you own today, it’s best not to take any risks with non-fiduciaries. To hire a fiduciary, reach out to Pillar Wealth Management, a reputable firm that specializes in serving investors with $5 million to $500 million in liquid assets. If you wish to obtain an idea about our fiduciary wealth management services first, schedule a video consultation with our team today!
- Investing for High Net Worth Individuals – For high net worth individuals, investing provides them with financial security…
- $10 Million Net Worth Lifestyle – Investors with high or ultra-high net worth have access to many financial opportunities…
- Business Exit Plan Advisor – Whether it’s time for you to retire or you’re looking to pursue other life dreams…
- JP Morgan Wealth Management: What to Know – High net worth and ultra-high net worth individuals, having accumulated significant amounts of wealth…