facebook twitter instagram linkedin google youtube vimeo tumblr yelp rss email podcast phone blog search brokercheck brokercheck
%POST_TITLE% Thumbnail

Being a Fiduciary in the Financial Services Industry

Blogged by: Juan Munoz CFP®, AIF®, CRC®, AAMS®

Being a Fiduciary in the Financial Services Industry

It is very interesting to see people's reactions when I tell them that English is not my first language because most people cannot tell that I have an accent.  Like most little kids I was drawn to watch cartoons growing up but I watched them in English which forced me to learn. Most of the time I would go to my dad whenever he was not working and repeat the word back so that he could tell me the meaning but, in many situations, I had to just improvise or figure it out on my own.  Just to be clear Google was not around back then, so I didn’t have the luxury to look it up on the internet.   

Once I attended the university, my English got a lot better, but I still run into a situation that I may not know the meaning of a common word here or there.  Imagine my expression when I first heard the word Fiduciary for the first time.  What is that and is it a bad word? Google, Oxford dictionary tells us that fiduciary is: “involving trust, especially with regard to the relationship between a trustee and a beneficiary.”

Sounds simple but there are many types of fiduciaries according to Michael Kitces: “Not all fiduciaries are equal; there are 4 different types of fiduciary financial advisors!”

Four Types of Fiduciary Financial Advisors

  1. A registered investment adviser (RIA), either under the SEC or as a state-registered investment adviser.
  2. DoL Fiduciary For Retirement Investors or a tie to a 401k plan or an Individual Retirement Account (IRA).
  3. CFP Board’s Practice Standards practicing as a Financial Planner
  4. Voluntary Fiduciary Standards 

Being a fiduciary can apply not just to a financial planner, but it can include a company, an association or individuals like CEO’s, CFO’s and HR individuals.  

Breaking Down What a Fiduciary Is:

So, let me explain is a few words what it would be to be a fiduciary without using so much lingo. Remember the day you were born? Probably not but this was a time when someone (parent, doctor, loved one, etc.) took care of you.  They made sure that you were healthy, had a full belly and were taken care of.  They were acting as your fiduciary and as you can see, we have all experienced what it is to be a fiduciary in some way. 

There are a lot of new changes on the horizon when it comes to being a fiduciary in the financial services industry but that does not mean that you cannot receive the care of an individual who is a fiduciary of your 401k plan, IRA, someone that does financial planning, etc.

In many ways learning a new word or a language depends on asking some questions.

Questions you can Ask your Financial Advisor to See if They are Acting as a Fiduciary on your Behalf:

  • Are you responsible for my retirement plan in any capacity?
  • How are you monitoring my financial success or is there a process you follow?
  • Would you claim to work in a fiduciary capacity and explain to me how that works?

Always remain inquisitive and remember that a simple cartoon like the teenage mutant ninja turtles can even teach kids a whole new language, so it is never too late to learn.  Cowabunga!! 

Have additional questions about being a fiduciary? We're here to help! 

Contact Us