Whenever my clients ask about my journey into financial advising, some are taken aback when I say, “to help people.” In these uncertain times, many people can feel helpless in making sound financial decisions, but it doesn’t have to be that way.
As a fee-only fiduciary, I’ve witnessed firsthand the impact of prioritizing our clients’ needs. Join me as I unveil why being a fee-only fiduciary is more than a title—it’s the compass guiding your financial journey to a more secure future.”
Are All Financial Advisors the Same?
Michael Kitces, a Certified Financial Planner (CFP®), has an interesting perspective regarding the ways in which we view the term “financial advisor” and offers insight into how the standard qualifications make it anything but a one-size-fits-all profession.
In his Financial Advicer Manifesto, Kitces hits on some pretty important (and little-known) points about what’s considered a qualified financial advisor.
Not all financial advisors are the sameDespite being a heavily regulated industry, the lack of regulation in the title “Financial Advisor” itself, creates limitations to the competency and quality of the financial advice given.
Standard regulations aren’t what you thinkThe financial service industry regulates advisors based on the financial products they implement rather than the quality of their advice.
Some financial advisors have ulterior motivesAdvice may be conflicted due to outside incentives such as commissions and other incentives that may not benefit the client.
Qualifications can still have consequencesWhether or not a financial advisor is properly qualified to make such important long-term decisions, the consequence of one bad choice could have devastating outcomes.
What Kitces highlights is that the term “Financial Advisor” actually has a historically low legal barrier, that simply requires licenses related to product sales and business conduct laws.
The good news is that many financial advisors invest heavily into developing their competency and skills to increase the likelihood of delivering sound and trusted financial advice. Kitces coined term “Financial Advicer” as an attempt to distinguish the difference.
Is a “Financial Advicer” a Fee-Only Fiduciary?
In short, a financial advicer upholds the same standards as a fee-only fiduciary.
While the term “Financial Advicer” isn’t widely recognized, the title of “Fee-Only Fiduciary” may look more familiar. Achieving this distinction isn’t about adding extra letters to appear prestigious; it signifies a commitment from financial advisors to maintain the utmost standards in financial advising.
A Fee-Only Fiduciary prioritizes their clients’ interests, placing their needs above their own, and consistently pursuing their long-term goals.
Commission-Based Financial Advisor Versus a Fee-Only Fiduciary Financial Advisor; What’s the Difference?
|Commission-Based Financial Advisor
|Fee-Only Fiduciary Financial Advisor
Operates under various compensation models, including commissions, fees, or a combination. This fee structure introduces the potential for conflicts of interest.
Operates solely on a fee-based compensation structure, charging fees for their advice and services rendered.
May have incentives tied to specific financial products they sell or recommend.
Doesn't earn commissions or incentives based on the financial products they recommend or sell.
|MAY PUT THEIR NEEDS FIRST
Not all financial advisors are legally required to act as fiduciaries which always puts clients' interests first.
Are legally and ethically bound to act as fiduciaries, meaning they must prioritize clients' best interests over their own.
Aims to minimize conflicts of interest by solely charging fees for their services, aligning their goals with clients' goals.
|TRANSPARENT FEE STRUCTURE
Often provides more transparent fee structure, making it clearer for clients to understand what they're paying for without hidden commissions.
After reading Michael Kitces’ insights into the evolution of financial advisors, I’m confident that I’ve chosen the best path for my clients. In every field, there are those who prioritize clients and those who prioritize personal gain. I take pride in my decision to embrace the role of a Fee-Only Fiduciary, and I’m dedicated to encouraging anyone looking for a financial advisor, to settle for nothing less. Your financial journey is important—choose your partner wisely.
Toberman Becker Wealth is a fee-only, independent fiduciary firm that operates within the best interests of our clients, always. Whether you’re retirement planning in your 50s or retirement planning in your 60s, it’s never too late to start exploring your retirement options. If there’s ever a question you have about your retirement planning preparedness, feel free to book a meeting or give us a call.
Disclosure: Any mention of a particular security and related performance data is not a recommendation to buy or sell. The information provided on this website (including any information that may be accessed through this website) is not directed at any investor or category of investors and is provided solely as general information. Nothing on this website should be considered as personalized financial advice or a solicitation to buy or sell any securities.
Michael is a highly knowledgeable and experienced partner at Toberman Becker in St. Louis. With his expertise in investment management, behavioral finance, and retirement planning, Michael is dedicated to providing his clients with the best financial guidance possible.
Having worked with clients on complex estate planning and developing investment strategies for a team of advisors, Michael’s experience spans across various areas of financial planning. What truly sets him apart is his unyielding desire to acquire knowledge for the betterment of his clients. At Toberman Becker, this commitment to continuous learning is the foundation upon which exceptional client experiences are built.
Michael earned a Bachelor of Science degree in Finance and Banking from the University of Missouri – Columbia. Additionally, he holds designations as a Chartered Financial Analyst (CFA) charterholder and Certified Financial Planner (CFP).
Beyond his professional achievements, Michael enjoys a fulfilling personal life in St. Louis. Living with his wife, Lindsey, and their beloved dog, Birk, he finds joy in activities such as golfing together and exploring local restaurants.