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If you put 50 financial advisors in a line-up…

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…how many could you REALLY trust? By “trust” I mean you knew in your bones that the advice you were receiving was for your benefit and not solely for theirs? Maybe 5? 10 at the most?

How many are simply acting in their own self-interest? How many are just “salesmen”? Who wants to actually subject themselves to the pain of a sales pitch on the latest and greatest financial product? It would just be easier to avoid it all together and try and figure it out on your own.

“He who fails to plan is planning to fail.”

Winston Churchill – WW2

But regardless of how you feel about financial planners, it doesn’t change the fact that you need a plan. So who do you trust?

Well, the preponderance of the advice out there is that you should look for a fee-based advisor. The thinking is that someone who is fee-based, and not solely commission based will act in your best interest. That’s likely true, but I’d like to add one more requirement – In addition to being fee-based, you need to find someone who is a licensed Fiduciary (Series 65 license). A Fiduciary is required to act in your best interest, not simply in your most “suitable” interest. So what’s the difference?

Well, to explain it—let me use my son who is 5 as an example. You know he gets hungry every day? I have to feed him THREE TIMES a day. And that little crumb-cruncher can really put a dent in my wallet!

Anyway—let’s pretend that I decided to meet his caloric need based on suitability. To do so, all I need to do is give him Frosted Flakes and Hershey Kisses for breakfast, Cheetos and popcorn (with butter) for lunch, and all the candy he can eat for dinner. That would work because I’ve met his caloric intake requirements. It may not be what’s best for him, but that’s not the standard here. I’ve given him a suitable amount of calories for the day.

Now, if I wanted to act in his best interests, and feed him a Fiduciary diet, I’d give him some oatmeal for breakfast, peanut butter and jelly with fruit for lunch, and some grilled chicken bites with broccoli for supper. Wouldn’t that be in his best interests?

So if you’re not sure whom to trust, start by looking for the Fiduciary standard!

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