Hiring a financial planner is one of the most important decisions you’ll ever have to make. It is, oftentimes, the first step toward financial freedom. And yet, making the wrong choice in who you hire can have disastrous consequences. That’s why it often makes sense to hire a fiduciary to manage your money. Fiduciaries have a legal obligation to act in your best interest.
Whereas other agents in the financial world might try to sell you products or services that don’t benefit you, a fiduciary should only suggest things that serve you and your financial goals. Fiduciaries are obligated to always act with total loyalty to you; however, a fiduciary offers several other benefits you may not have considered.
Oftentimes, fiduciaries are registered with government agencies such as the SEC. Because of this, they must remain compliant with the rules and regulations of their governing body. This benefits you because one of the requirements of the SEC is that fiduciary financial advisors provide full disclosure of any information that could be deemed relevant to a particular investment.
This means that you should be provided with all the information necessary to make a confident and informed decision regarding your investments. With this information, you’ll know of potential risks involved with a specific investment or class, as well as how they could fit into your overall investment strategy. This is an incredible benefit. It allows you to enter into an investment with confidence and ensures that you’re given the opportunity to be heard before any decisions are made.
Adjusting Your Plans To Accommodate Major Life Events
Another benefit of having a fiduciary is the assurance that you’ll never have to go through the ups and downs of life on your own. Although you can lean on your friends and family during hard times, they aren’t likely going to be much help when it comes to your financial plans. That’s where your advisor comes in.
Life comes at you quickly. Perhaps you’re getting married, having a child or buying a new home. All of these are wonderful milestones that can have a major impact on the trajectory of your financial plans. A fiduciary could adjust your plans and strategies to help you afford these fruits while limiting the long-term ramifications so you can still reach your financial goals.
Similarly, a fiduciary could help to prepare you to weather prolonged illness, disabilities and even the loss of a loved one by making the appropriate changes and adjustments to fit your needs following such tragic life events. Additionally, you could find comfort in knowing that at least your finances are being cared for while you focus on what really matters.
No Conflicts Of Interest
This is especially important given the last benefit of hiring a fiduciary. The last thing you want is to have an advisor receiving kickbacks from “ACME Inc.” while investing all of your money into the same company on your behalf. As a part of its regulatory standards, the SEC requires that fiduciaries actively avoid any potential conflicts of interest when making investment decisions for their clients.
With so much uncertainty in the financial world, it’s nice to know that you can rely on a fiduciary to act in your best interests. If you’re seeking the help of a financial advisor, there are many who could help you reach your goals, but a fiduciary may offer up additional peace of mind.