Fiduciaries are professionals entrusted with managing individuals’ and entities’ assets and investments. They have a legal and ethical responsibility to act in their client’s best interest and put their interests before theirs. Unfortunately, many myths and misconceptions about fiduciaries prevent some people from seeking their services. Continue reading to debunk some common myths about fiduciaries and help you understand their role in managing your assets.
Myth #1: Fiduciaries Are Only for the Wealthy
That fiduciaries only work with the wealthy is one of the most common myths about them. This misconception is not true. Fiduciaries work with many clients, from the very wealthy to middle-class individuals and families.
Many fiduciaries specialize in working with clients with more modest assets to manage. Fiduciaries commit themselves to helping their clients achieve their financial goals, regardless of their income or net worth.
Myth #2: Fiduciaries Are Only for Retirement Planning
That they only help with retirement planning is another myth about fiduciaries. While retirement planning is an important part of their role, fiduciaries can also help with many other aspects of financial planning.
They can help you with tax planning, estate planning, investment management, and more. Fiduciaries take a holistic approach to financial planning and will work with you to create a comprehensive plan that considers all of your financial goals and objectives.
Myth #3: Fiduciaries Charge High Fees
Many believe that fiduciaries charge high fees for their services. While it is true that fiduciaries may charge more than other financial professionals, it is important to remember that they also provide a higher level of service. The benefits of hiring a registered investment advisor can outweigh the higher fees.
Fiduciaries are not paid on commission, so they have no incentive to recommend investments or products that may not be in your best interest. Instead, a flat fee or a percentage of the assets they manage is how they make money. This fee structure ensures that fiduciaries are always working in the best interest of their clients.
Myth #4: Fiduciaries Do Not Invest in Individual Stocks
Some believe that fiduciaries only invest in mutual funds and other pooled investments. While it is true that many fiduciaries prefer to use mutual and exchange-traded funds for their clients, they can also invest in individual stocks if appropriate for their client’s goals and risk tolerance. Fiduciaries will work with you to design an investment strategy tailored to your needs and objectives.
Myth #5: Fiduciaries Are Not Regulated
This myth is perhaps the biggest. Both state and federal regulators highly regulate fiduciaries. They must register with the Securities and Exchange Commission (SEC) or state securities regulators and adhere to strict standards of conduct. These regulatory bodies hold fiduciaries to a higher standard of care than other financial professionals, which means they must always act in your best interest.
It is important to understand and debunk the common myths about fiduciaries to receive the financial guidance you deserve. A fiduciary can help you achieve your financial objectives, whether you are a wealthy individual or a middle-class family. They adhere to greater regulations and regulatory bodies hold them to a higher standard of care than other financial professionals. Consider working with a fiduciary if you require financial planning and investment management services. They have the expertise and experience to help you achieve your goals and secure your financial future.
