Wednesday, March 27, 2013

Fee-only advising: putting “You First”

People often ask me why I chose to become a fee-only financial advisor. The answer is simple—I wanted to be able to put my client first, and act as a fiduciary: a type of advisor who, by law, must place the client’s best interest ahead of their own.

Unlike what many consumers believe, most financial advisors do not have a fiduciary duty to their clients. Instead, advisors are contractually obligated to put the good of their own firm ahead of their clients.

That is 100% contrary to the way I want to work. As a fee-only financial advisor, I provide frank, independent advice, based on the “big picture” of my clients’ finances—including tax implications and personal goals. Neither I nor anyone in my firm is compensated based on the products we recommend. By being fee-only, we’re free to recommend whatever strategies or products will best benefit our clients.

Sometimes this means telling a client something they don’t want to hear: for instance, that an investment opportunity is too good to be true, or that a “friend” they’ve gotten advice from is not someone they should be listening to. But, I’ve heard from clients that they appreciate my honesty and that they know I’m giving them my unvarnished, objective advice.

My goal is always to act with transparency and integrity, putting “You First”—meaning, the client’s interest ahead of my own. To me, that’s what fee-only advising (and even life!) is all about.

By Jerry Wade, CFP®, CFS
Chief Wealth Advocate