You might have a difficult time asking for financial advice. Many people do.
You are capable of conducting research, weighing options, and making necessary financial decisions. While loss of critical time may eventually compel you to reach out to a financial advisor, your hesitancy to do so might be feeling that you cannot entrust your future to someone else. We understand that.
The Need for the Right Trusted Advisor
Once you are ready to seek guidance, performing your due diligence to select the right financial advisor can be stressful, especially when so much is at stake. Whether it’s your growing family or an established committee that you’re planning for, either scenario would benefit from the experienced insights of a trusted financial advisor.
✅ An Employer or plan sponsor Providing Retirement Benefits to Staff?
Retirement plan sponsors are fiduciaries that have a duty to act in the best interests of their plan participants. However, selecting and monitoring 401(k) or pension plans are seldom a sponsor’s only responsibilities. Engaging fiduciary advisors to manage investment portfolios can ease administrative burdens and transfer risk to professional investment advisors.
✅ Looking to Secure Your Financial Legacy for Your Family?
Affluent families that have grown their wealth due to hard work and talent need to select an advisor who understands their concerns and hopes for their beneficiaries and treasured charities. Patience and care are needed to ensure assets remain protected when future changes inevitably occur.
✅ In Tribal Leadership, Seeking to Secure Your Tribe’s Economic Strength?
Tribal governments need investment advisory services that preserve their tribe’s economic strength and diverse income streams. Tribal leaders deserve to work with professionals who understand and respect their tribe’s sovereignty and traditions.
No matter what your financial responsibility, the opportunity to plan for the future and preserve wealth for upcoming generations is in your hands.
Engaging a Fiduciary
If you are going to work with a financial advisor, you want to work with a firm you can fully trust to act on your behalf, whether for your organization’s or your own individual interests. Generally speaking, financial advisors possess a wide range of education, experience, and credentials — so, that makes deciphering which advisors to work with a less-than-easy task.
A clear way to raise the bar? Select a fiduciary financial advisor.
Fee-only fiduciary advisors don’t put their own financial interests first — ever. Clients in financial relationships are inherently vulnerable, so the instrumentality of fiduciaries is to protect clients and client assets from risk. Within financial markets and the wealth management business, fiduciaries are bound to serve in their clients’ best interests both ethically and legally in the United States.
Written Obligations and Disclosures
Fee-only fiduciary activities can span a wide range of responsibilities and activities such as:
- estate planning,
- asset allocation design, and
- investment implementation and monitoring.
Legal & Ethical Standards
To uphold legal and ethical standards, the Securities and Exchange Commission (SEC) requires fiduciary relationships between investment advisors and their clients. Likewise, the Department of Labor (DOL) requires employer 401(k) and pension plan sponsors to understand their own fiduciary responsibilities and, when necessary or desired, to seek the counsel of fiduciary investment advisors.
Fee-only Fiduciary: In the services of their clients at all times
Regardless of the duties assigned and accepted by the fiduciary, their primary obligation is to be of service to their clients at all times.
A critical factor in a financial fiduciary relationship is that the scope of the fiduciary relationship must be agreed upon when the engagement is accepted. This formal process acknowledges the responsibilities accepted by the fiduciary and compels the fiduciary to perform those activities solely in the best interest of the client.
How is a Fee-Only Fiduciary Advisor Compensated?
Clients pay for financial services in one of three ways, and each method has distinct characteristics:
Clients are charged fixed or hourly rates, or are billed based on the percentage of assets under management (AUM). Rates may vary due to the complexity of the work needed and the liability associated with the account size. The client does not pay the adviser any other form of compensation.
Advisors are paid from commissions earned by selling clients specific products or services. Prices paid may contain hidden markups that inflate the price to absorb the fees. As it is well known in any industry, professionals who earn commissions may be biased to recommend one product over another to increase their income.
⚫ Combination of Fees and Commissions
Many advisors charge management fees directly to clients while also accepting commissions, rebates, or bonuses from the companies whose products they recommend and purchase on behalf of their clients.
REDW Wealth is a fee-only fiduciary.
We will never accept commissions, rebates, referral fees, or other product provider incentives. 12(b)-1 fees from mutual fund purchases, if available, are rebated back to the retirement plans that purchased them.
4 Advantages of Fee-Only Fiduciaries
Providing fee-only financial advice to businesses, tribes, and individuals is one way REDW Wealth advisors embrace our value of integrity.
Clients entering a business relationship with fee-only advisors are fully aware of the costs they will be charged for services rendered. In contrast, commission-based advisors may not disclose the full extent of their true compensation.
Commission-based advisors purchase stocks, mutual funds, and other investment products on behalf of their clients and use various service providers to execute the exchanges. The advisors will likely disclose that they receive a percentage of the purchase price as their compensation, but other benefits they receive may not be as obvious.
Insurance premiums and other prices charged to clients of commission-based advisors may be inflated to reflect the seller’s commission expense. Rebates and bonuses received after a certain number of purchases may be earned from specific sales to several clients and are unlikely to be prominently defined and disclosed to each client.
REDW Wealth advisors prefer the transparency that the fee-only compensation structure provides. Our clients never need to wonder about any hidden costs that their organizations and families may be incurring for our services.
Conflicts of Interest
While fiduciaries and advisors are mandated to explicitly declare any potential conflict of interest, commission-based advisors have an inherent bias toward selecting products that benefit the advisor by virtue of receiving higher compensation.
When paying for services on a commission basis, commission-based advisors may have either an unconscious bias or an intentional bias. With unconscious bias there is no overt preference of one investment over another in a purchase decision, but the choice of product will be influenced by the knowledge that they would receive different remunerations from one to another.
Ethical and Professional Standards
Fiduciaries — particularly those that operate on a fee-only basis — are committed to the highest professional standards in fulfilling their duties. Many, such as those at REDW Wealth, enroll in education and certification programs that build on their deep understanding of fiduciary duties and obligations.
Professional certifications, such as the Accredited Investment Fiduciary® (AIF®) Designation issued by The Center for Fiduciary Studies, requires training, passing a comprehensive exam, meeting experience requirements, and agreeing to ongoing training. Recipients of the designation must also adhere to the Accredited Investment Fiduciary Code of Ethics and Conduct Standards.
Broad Investment Options
A fee-only fiduciary advisor’s compensation rate remains the same, regardless of the investment selected or recommended for a client account. At REDW Wealth, we can truly center our focus on our clients’ needs and goals as we explore a wide range of suitable options for them.
Have a Question? Ask us today!
Begin a conversation with a trusted fee-only fiduciary advisor at REDW Wealth. We are eager to learn about your desires for the future.
Fair and Balanced Disclosure
Adherence to our fiduciary duty is not a guarantee of client satisfaction or any particular outcome. Neither a financial adviser’s compensation structure, nor their professional credentials or designations, should be viewed as the sole determining factor in obtaining or retaining their services. Please see our disclosure page for further information on the professional designations discussed herein. Not all services will be appropriate or necessary for all clients, and the potential value and benefit of the adviser’s services will vary based upon a variety of factors, such as the client’s investment, tax, and financial circumstances and overall objectives. Past performance does not guarantee future results. All investing comes with risk, including risk of loss. Advisory services provided by REDW Wealth, LLC. Tax and accounting services provided by REDW, LLC.