Asset Fund Holdings: What is a Fiduciary?

November 5, 2021.

The financial industry can be confusing with its many professional titles, including some common ones like brokers or Registered Investment Advisers (RIAs). And certain titles that may sound similar such as advisor with an “o” and adviser with an “e” can mean very different things. You may have heard the term “fiduciary investment adviser,” but investment professionals rarely unpack this industry-specific term. In this article, we hope to help you distinguish between different types of financial professionals, introduce what it means to be a fiduciary adviser and discuss our’ fiduciary status and approach to money management

Fiduciary Defined

At its most basic level, a fiduciary is a person or firm who acts for clients and is required to put their best interests first at all times. RIAs are required to register with the Securities and Exchange Commission (SEC) or the states in which they do business depending on how much in assets they manage. In either case, they are held to the fiduciary standard to act in clients’ best interests.

However, not everyone providing financial advice is a fiduciary. Brokers often earn sales commissions for the financial products they sell to investors. Because of this, some brokers may have incentives to recommend products that aren’t necessarily in your best interest, but may earn them a larger sales commission.

How to Choose the Right Investment Professional

Some investors try to find their investment manager by hiring an RIA held to the fiduciary standard. This is a good place to start because these types of advisers are obligated to act in your best interests. However, there are other important aspects of a good adviser to keep in mind and the best one for you likely depends on your personal situation and preferences.

To make sure a financial professional is a good fit for you, you should ask the right questions. Some important topics to cover are an adviser’s investment philosophies, sources of compensation and any potential conflicts of interest. Proper firm structure enables advisers to act on their values and includes factors like fees arrangements and investment strategies geared to meeting your needs. If your adviser sells commission-based products or values their bottom line over client goals, they may not always serve your needs first.

Our Approach

At the heart of a good client-advisor relationship is trust, and it can be difficult to have that trusting relationship if your financial professional may be recommending products that aren’t in your best interest. That’s why we have been held to the fiduciary standard since our founding.

We are a fee-only, fiduciary adviser and don’t earn commissions by trading in your account. While some brokers may call you to sell products or earn sales commissions, we only place trades in your account based on our forward-looking market forecast. For example, if we forecast that non-US stocks will outperform US stocks, we may overweight non-US stocks in your account. Similarly, if we believe a sustained market downturn has begun, we may choose to take a defensive positioning for our clients, as long as we believe it is in their best interest

We also work with third-party custodians to house our clients’ assets. This relationship helps provide transparency above and beyond our fiduciary duties and instills trust in our asset management relationships. When we first began managing client assets, our founder Morgan Pryce knew that having a third party who provides regular client reporting was crucial to fostering client relationships. This means that, though we generate our own client reports, your custodian also provides regular reporting for your accounts, so you know exactly what’s going on.

As our client, you receive a dedicated investment counselor who knows your long-term goals and financial situation. Your Investment Counselor is your resource to ask any questions you might have about your portfolio or other market-related topics. He or she will reach out to you regularly to provide any updates on our market forecast, answer any questions and make sure your goals and situation haven’t changed.

Contact us Today

By working with a fiduciary like us, you can be assured you’re getting investment advice from a firm that has a duty to disclose conflicts of interest and put your interests ahead of its own.