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Navigating the waters of selecting a financial advisor can be difficult, but by choosing one who has fiduciary responsibility, you are choosing an advisor that has a legal responsibility to put your needs ahead of their own. There are a number of important differences that separate advisors who have fiduciary responsibility from those who don’t. The following article outlines those basic differences.

Financial Advisors are Fiduciaries, so what?

Taken from Paladin Registry

Very few investors know the critical importance of selecting an investment fiduciary as their financial advisor. That’s because the financial securities industry deliberately blurs the distinctions so lower quality sales representatives can sell you inferior investment and insurance products for big fees and commissions.

It is important to know there are two primary types of investment advisors and not one. Following is a brief description of each type so you know the differences.

Fiduciary advisors have the following characteristics:

• They are Registered Investment Advisors or Investment Advisor Representatives
• RIAs and IARs are held to the highest ethical standards in the industry
• They frequently use job descriptions such as: Financial Advisor, Investment Advisor, Financial Consultant, Financial Planner, Money Manager
• They provide financial advice and services for fees
• They acknowledge they are fiduciaries when they provide investment advice and services
• Fiduciaries are required to always put their clients’ financial interests first versus their own needs for revenue and income

Non-Fiduciary advisors (sales representatives) have the following characteristics:

• They hold securities licenses, such as Series 6 and 7
• There are held to much lower ethical standards than RIAs and IARs
• Their job descriptions are sales representative, investment representative, financial consultant (noteoverlap with fiduciary advisors)
• Their licenses limit them to selling investment products for commissions
• They are not allowed to charge fees for their advice and services
• They are not fiduciaries because they are not RIAs or IARs
• The critical question you should be asking yourself is do you want a sales representative investing assets that will impact your standard of living during retirement and your financial security late in life? If your answer is no, and it should be, then you should limit your selection to fiduciary advisors.

Paragon Wealth Management is a provider of managed portfolios for individuals and institutions.  Although the information included in this report has been obtained from sources Paragon believes to be reliable, we do not guarantee its accuracy.  All opinions and estimates included in this report constitute the judgment as of the dates indicated and are subject to change without notice.  This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.  Past performance is not a guarantee of future results.