Fiduciary Advisors For High Net Worth Individuals
Are you looking for a fiduciary advisor? Financial advisors love talking about risk management, asset allocation, investment management, picking the best stocks, etc. But do they actually pursue all those activities? And more importantly, do they do so holistically? And what exactly does a fiduciary advisor for high net worth individuals do?
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.
With the prevalence of fee-based models, advisors tend to be motivated by commissions that they may earn on the recommendation of certain investment products. Or, perhaps, they are so specialized in one area of financial advisory, that they might not see the broader picture.
They may be so focused on assets under management and rate of return, that their investment decisions can have big cost implications for the client.
Or worse, they may be a large listed entity and all they care about is maximizing the firm’s profits and creating “shareholder value”.
Not every financial advisor works on a fee-only model that Pillar Wealth Management does for individuals with $5 million to $500 million in investible assets.
But you might wonder, if you are paying the financial advisor a fee, either a human financial advisor or Robo advisors, then aren’t they supposed to make decisions that serve your best interests? Shouldn’t there be alignment between the advisor’s work and your goals, interests, and requirements?
And if you are a high net worth or an ultra-high net worth individual, then the stakes are much higher for you. A wrong decision can potentially cost you millions of dollars.
In this article, we will provide essential knowledge about a fiduciary standard, and why working with a Pillar Wealth Management advisor is important for you.
|Table of Contents
|What Is a Fiduciary?
How to Determine If a Financial Advisor is a Fiduciary
Why Working With a Pillar Wealth Management Fiduciary Advisor Is Important For You
What Is a Fiduciary?
In wealth management, acting as a fiduciary generally means acting on behalf of the client to manage his/her assets in good faith and trust. The fiduciary has to manage the assets for the benefit of the client rather than their own. There can be no personal benefit for the fiduciary from the management of a client’s assets.
As explained in this book on choosing the best financial advisor for those with $5 million to $500 million in liquid assets, you will realize how choosing to work with a fiduciary advisor for high net worth individuals can save high net worth individuals millions of dollars over the course of retirement.
A good example of a committed fiduciary is Pillar Wealth Management, a wealth management firm that specializes in portfolios from $5 million to $500 million.
An experienced advisor who is also a fiduciary will advise you on multiple aspects of a seemingly simple decision and minimize any potential conflicts of interest. For example, if your real estate makes up an unusually large chunk of your total liquid net worth, then the fiduciary will work out a plan for asset diversification.
You need to identify your needs before working with a fiduciary financial advisor. Because a fiduciary financial advisor will only ‘represent’ you, identifying your needs and desires is important before hiring one. It is all about being either a non-fiduciary or fiduciary financial advisor. Thus, identify your needs, and your financial advisor will recommend services and holistic financial planning that will protect your assets.
Besides that, choosing a financial advisor that has CFP or Certified Financial Planner board members certification is a good way to ensure if they have credibility and all the right credentials.
It means that the fiduciary will figure out which property’s sale you should prioritize, how you can minimize taxes when you do the deal, and where the windfall should be re-invested. If you have kids and a family, then setting up a living trust could also be recommended.
As you can see, multiple areas are covered. First is concentration risk (having too much wealth into one asset class), asset allocation and investment management (where to invest the windfall), managing your credit cards, retirement plan, tax planning, and estate planning.
As a fiduciary, the wealth advisor has to act in the best interest of the client wherever there is a need to do so. It requires having a broad perspective that takes into account the long-term goals and well being of the client.
You can schedule your free consultation with Pillar Wealth Management to know how it approaches wealth management for high net worth individuals from a fiduciary perspective.
An investment advisor who has the capacity to act as a fiduciary is registered with the state regulator or the SEC. In order to maintain this registration, the fiduciary has to always act in the best interest of the client. The fiduciary has to also inform the client whenever there is any potential conflict of interest.
This duty is something that is required by law. So, when someone claims that they will act as a fiduciary, it is serious business. Therefore, it is a good idea to verify the fiduciary registration of that advisor to be certain about the claim.
According to SmartAsset, some of the best fiduciary financial advisors are Fisher Investments, CAPTRUST, Mercer Global, Madison Investment Advisors, and Summit Rock Advisors.
A fiduciary always puts the interests of the client first and never profits personally from their relationship. A fiduciary is required to take into account the needs of the client in any decisions.
Having a fiduciary gives you peace of mind and confidence in your financial future. You know that the fiduciary is not beholden to other interests when working with you to implement a financial plan.
You should pay an annual fee that reflects the value of the assets under management, usually a small percentage, so you may need to have a substantial minimum amount to invest.
Having a fiduciary ensures that they place your interests above their own. They are not beholden to any outside interests, and their decisions on your behalf are based on your needs and circumstances.
You may hold a fiduciary to a higher standard, knowing they will never put their own interests above those of the client, and they will always take into account your personal goals and circumstances.
Fiduciaries are not allowed to act in their own self-interest and cannot do something contrary to the client’s interests. They are not allowed to misrepresent the products and services they offer.
You should ask them if they are a fiduciary advisor or ask them if they have credentials or a designation that requires them to act as a fiduciary advisor at all times.
The five fiduciary duties are duty of care, duty of loyalty, duty of confidentiality, duty of accounting, and duty of obedience.
A fiduciary advisor is usually fee-only, making them free of conflicts of interest. However, with appropriate mitigation of conflicts, the advisor could be paid both fees and commissions at times.
How to Determine If a Financial Advisor is a Fiduciary
Once you know the importance of an advisor acting as a fiduciary and what fiduciary duties are, you probably want to know one thing – How to know if a financial advisor is a fiduciary?
After all, there are so many financial advisors just in your area. If you want to find fiduciary advisors for high net worth individuals, then there are a few ways in which you can find one.
Firstly, you can search online to find financial advisors in your area. Once you find a few reputed options, you can visit their website and check if they mention anything about being a fiduciary.
Check out this authoritative guide: The Ultimate Guide to Choosing the Best Financial Advisor: For Investors With $5 Million to $500 Million in Liquid Assets to know more about how you can work with a financial advisor who is a fiduciary. If you do not find any specific information, then you can simply email them or ask them the question when you meet them.
You can also ask the financial advisor about case studies or specific examples of how he/she advised high net worth individuals. You want to watch out for decisions that were in the interest of the client.
You also want to spot instances in which the advisor went beyond the specific decision at hand and advised the client on other seemingly unrelated aspects simply because it was in the long-term interest of the client.
Another intuitive way of finding out if financial advisors take their fiduciary status seriously is to ask them for the reasons that they turn down clients.
Some advisors turn away business because the clients won’t take on-board specific pieces of advice recommended by the advisor. Such client actions are deemed to be interfering with the advisor’s fiduciary commitment.
If that is their thinking, then you know that the advisor is serious about their fiduciary duties, even at the cost of losing business.
You can also discuss the topic of the fiduciary advisor by scheduling a chat with Hutch Ashoo from Pillar Wealth Management. He has acted as a fiduciary for multiple ultra-high net worth and high net worth individuals and has multiple examples to share.
Is There a Difference Between a Fiduciary and a Financial Advisor?
Most financial advisors are trained and qualified to provide financial advisory services. Most are certified, and their credentials require them to exercise a fiduciary duty. Nevertheless, some advisors are not fiduciaries and are not bound to place the interests of their clients above their own, to work in their clients’ best interests, or to disclose any conflicts of interest. They can be motivated solely by making a profit.
The Fiduciary Duty Is the Highest Standard of Care
To be a fiduciary, an advisor must fulfill the duty of loyalty to the client, which means placing the interests of the client above their own, avoiding conflicts of interest, and acting without regard to the financial interests of any other parties.
The fiduciary must exercise a duty of care, acting with skill and diligence, conforming to the client’s risk tolerance, goals, and circumstances.
The fiduciary must comply with the directives of the client and in accordance with their contractual agreement.
A fiduciary financial advisor may not misrepresent material facts or engage in any act that could defraud or deceive the client.
A fiduciary is bound to fully disclose any possible conflicts of interest.
What Happens if a Fiduciary Duty Is Breached?
As long as the financial advisor adheres to the fiduciary standard of care, they cannot be held responsible for the performance of the investments they recommend to the client.
However, if a fiduciary duty has been breached, such as the advisor receiving profits or fees not disclosed to the client, the client may sue. They can make a legal claim for lost profits, out-of-pocket losses, attorney fees, and court costs.
Fiduciary Standard vs. Suitability Standard
The suitability standard, set by the Financial Industry Regulatory authority (FINRA) and the SEC, allows a broker-dealer to make recommendations that are suitable for the client and whose costs are not excessive. The advisor can recommend products that will benefit their employer and still be suitable to the best interests of the client. They could recommend a more expensive product as long as it is ‘suitable,’ which a fiduciary cannot do. However, they must fully disclose conflicts of interest and exercise diligence in executing trades at terms favorable to the client.
How Advisors Are Compensated
Advisors are compensated based on three fee models: fee-only, commission-only, or a combination of fees and commissions (considered fee-based).
Fee-only advisors may charge a percentage of the value of the assets they manage; they may charge a flat fee or an hourly fee, and they may charge a fee-for-service. They receive no other compensation for their advisory services.
Advisors must disclose their fees for the investments they recommend—at the time of the investment or before.
Commission-based advisors earn commissions from the sale of investments. They may also earn a fee from their employer for selling certain products. They may also charge a percentage of the client’s assets.
An advisor who receives both fees and commissions is considered fee-based.
Are Robo Advisors Fiduciaries?
The SEC has determined that robo advisors are fiduciaries because they are registered as investment advisors and should be held to the suitability standard. However, they do not have the cognitive ability to fully understand the client’s personal and financial circumstances. They are only expected to be reasonable.
Do I Need a Fiduciary Advisor?
Not everyone needs a fiduciary. A fiduciary designation implies the advisor will work in your best interests, along with their other duties. With complex financial needs, you may benefit from having a fiduciary advisor.
Of course, many non-fiduciary advisors can provide excellent financial services, and the key factor in your choice of advisor is whether they are someone you trust and who helps you meet your goals. Good communication is essential; you want honest conversations with your advisor about how they are paid and how they mitigate conflicts of interest.
If your circumstances are straightforward, a commission-based advisor can provide the help you need.
How to Find a Fiduciary Advisor
If an advisor claims to be a fiduciary, you should ask for a written statement—included in any agreement you have established between you, which should include transparency in fees and how conflicts of interest are mitigated by the advisor. A fiduciary advisor should meet the standards of the Certified Financial Planners board. Ask if there are circumstances under which they do not act as a fiduciary, such as accepting commissions for a particular product. So, if you know they work with an insurance company, you can always purchase insurance elsewhere.
Why Working With a Pillar Wealth Management Fiduciary Advisor Is Important For You
At Pillar Wealth Management, we obsess about one thing – your financial serenity. We want you to sleep peacefully at night and achieve all your financial goals during the day.
In order to help you achieve financial serenity for the rest of your life, we make sure that we listen to you and understand what motivates you.
Pillar Wealth Management is the quality-focused fiduciary advisor for high net worth individuals. We do not take as many clients as possible to maximize our fees. In fact, we will only accept 17 new clients this year.
What we make sure is that we go in-depth into every aspect of our client’s financial lives and then recommend decisions or actions which are in their best interests. In fact, we encourage you to start a conversation and get to know how our exclusivity helps us cater to the needs of high net worth and ultra-high net worth clients.
Rather, we look at every investment transaction holistically and focus on the net gain that our clients get after accounting for investment costs. Check this book on improving portfolio performance for investors with $5 million to $500 million in investible assets to know more about our process.
You will understand that we have adopted a unique process because we are fiduciary. We do what is best for our clients from every possible angle including analyzing the existed data.
We hope we have answered the question of why working with a Pillar Wealth Management advisor is important for you.
Hutch Ashoo and Christopher Snyder are the expert founders of independent, fee-only, and fiduciary wealth management firm Pillar Wealth Management.
If you are in the United States or anywhere and would like to speak with them or simply ask any questions about how custom and trusted wealth management advice is offered to high net worth individuals with $5 million to $500 million in investible assets, then feel free to access our website or start a conversation.
To be 100% transparent, we published this page to help filter through the mass influx of prospects, who come to us through our website and referrals, to gain only a handful of the right types of new clients who wish to engage us.
We enjoy working with high net worth and ultra-high net worth investors and families who want what we call financial serenity – the feeling that comes when you know your finances and the lifestyle you desire have been secured for life, and that you don’t have to do any of the work to manage and maintain it because you hired a trusted advisor to take care of everything.
You see, our goal is to only accept 17 new clients this year. Clients who have from $5 million to $500 million in liquid investable assets to entrust us with on a 100% fee basis. No commissions and no products for sale.
- Wealth Manager – Next to your spouse and kids, your wealth manager is the single most important person in your life…
- Citi Personal Wealth Management – Wealth management refers to financial advisory services catering to affluent individuals and families…
- High Net Worth Tax strategies – A lot of advice that claims to offer tax strategies for ultra-high net worth investors could really apply to anyone…
- High Net Worth Tax Strategies – It’s no secret. High net worth individuals pay the most money in taxes, and this is unlikely to change anytime soon…