What Is a Fiduciary Investment Advisor?

What Is a Fiduciary Investment Advisor?

The short answer to “what is a fiduciary investment advisor” is an investment advisor who is legally obligated to put your financial well-being ahead of their own. 

Fiduciaries are held to a higher standard than other advisors, some of whom are actually salespeople. As fiduciary financial advisors in Minneapolis, representing our client’s best interest and keeping clear of conflicts of interest are core tenants in our client relationships. 

Independent Wealth Management: Fiduciaries, Explained 

There is no shortage of titles and acronyms in the financial industry today. So, it is not difficult to understand why some people find it all confusing. Unfortunately, not all financial advisors look out for your best interests

Unfortunately, scammers take advantage of this situation when they can.

As troubling as that fact is for investors, criminal activity is a longstanding source of frustration among honest members of the professional financial community. That is one of the reasons why the Investment Advisers Act of 1940 was passed. 

This U.S. federal law defines and regulates the conduct and responsibilities of an investment advisor. It also laid the basis for monitoring anyone who would advise individuals, institutions, or pension funds on invest-related matters. 

One critical distinction between advisors is fiduciary or non-fiduciary. Fiduciary advisors are registered with state or federal authorities and are held to strict conduct and client disclosure standards. Non-fiduciary advisors are not. 

A fiduciary financial advisor commits to putting their client’s interest above their own. For example, if they recommend a financial product that pays them a fee or commission, they must disclose that to the client as part of the presentation. Many fiduciary advisors do not accept any fees or commissions outside of what their clients pay them specifically to avoid any apparent conflicts. 

A non-fiduciary advisor, like a broker-dealer, may not be required to disclose all conflicts of interest. They can sometimes recommend investments or insurance products based on the commissions they will receive rather than the client’s best interests. 

The unfortunate truth is that even non-fiduciaries can claim the job description of “financial advisor.” Big firms want someone with at least a bachelor’s degree in finance or accounting, but individual actors sometimes only need to be good salespeople. 

In contrast, a fiduciary investment advisor is the genuine article. They are generally trained,  certified, and monitored professional financial advisors. At ViaWealth, we prefer accountability anyway, but we want you to know that you are legally protected, too. 

Fundamentally, we believe in treating clients the same way that we would want to be treated were our roles reversed. Thankfully, this is the essence of the fiduciary standard of conduct, both ethically and legally. 

So, we readily promise to put your financial needs ahead of ours. Honesty is a much lower-maintenance way of life. 

Why We Are an RIA 

Registered investment advisors (RIAs) are required to act as fiduciaries and are held to a higher standard of conduct than registered representatives. If an RIA has $110 million or more in assets under management, they must be registered with the SEC. If they do not, they register with state securities authorities.

ViaWealth is what’s known as an independent RIA. We are especially proud of the “independent” part of the phrase because we are not beholden to an investment firm or bank. That, in turn, helps us operate free of the binds of insurance companies or banks that might encourage us to emphasize their products over others. 

Our recommendations come solely because we have done the research and believe that a particular asset is a wise choice for growing your portfolio. 

We also believe that you should be the one in charge of your assets. In other words, your preferences, goals, and risk tolerance are the determining factors when your assets are managed day by day. 

When an international corporation owns a financial firm, this may not always be the case. Someone’s advisor may be directed by their manager, who is directed by their manager, who someone outside of the continental U.S manages. 

As a result, product recommendations can be based on what benefits the company rather than based on what is essential to you personally. 

Being an independent registered advisor means that any entanglements do not compromise us. We are on your side.

The Value of Financial Planning: Why We Are Fee-Only

We really mean the “independent” part. ViaWealth is not even owned by private equity investors. Our founders started this company after a tour of all of the major providers. They wanted to bring something more to investors than simply money management based on risk tolerance. 

Some fiduciary advisors are beholden to their private equity investors and the profits they expect from the company. So, while they represent their clients to the best of their ability, they are also driven by investors wanting a specific return on their investments. 

ViaWealth is not under this pressure. In fact, to make absolutely certain that we stay free of potential conflicts of interest, we are a fee-only firm, as well. This means that we earn our paychecks exclusively through what you pay us.

Investment advisors who receive commissions operate differently. After they conduct an investment portfolio review, they could suggest purchasing a stock that they will receive a commission on; money in their pocket for recommending. 

In fairness, many of them will reveal this fact to you before recommending something that pays a commission. Nevertheless, no one could blame you for wondering how many of their suggestions are objectively in your favor. 

Other investment firms and advisors list themselves as “fee-based.” However, this can be deceptive: they still receive commissions. Their workaround, essentially, is that they refer to their commissions as “fees.” 

ViaWealth is deliberately different, evidenced by our mission and values. You also might say that it is one of the reasons that we call the way in which we handle your wealth management goals “values-based” financial planning. 

To a greater extent, we call it that because we carefully interview you and gather all the data we can on your personal values before beginning your financial plan. That is the midwestern way, but it is our way, too. 

However, that approach also stems from our personal values, like honesty and integrity. Contact us today to learn more about our independent wealth solutions. 

Invest With Confidence. Invest With ViaWealth.

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More about the author: Reid Larson

Reid is the Managing Member and Founder of ViaWealth LLC.

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