Financial Advisor, Financial Services, Insurance Brokers, Personal Finance

What Is a Fiduciary Financial Advisor?

When you are figuring out how to manage your finances, it’s important to know not only about the different strategies for financial planning but also how the money management industry works. When you are entrusting your savings and income to someone, you want to be confident that this individual is responsible for acting in your best interests. Unfortunately, this is often not the case. Therefore, it’s crucial to vet financial advisors carefully to see if they are the right fit for your financial situation and goals.

Fiduciary duty acquired a much deeper meaning in April of 2016 when the Department of Labor released their Fiduciary Rule. It was vacated later, but a newer version was approved by the Biden administration in February of 2021.

The new rule basically separated the world of financial advisors into two different categories: fiduciaries and nonfiduciaries. If anything, this just added to the confusion and risk for investors. The problem stems from the fact that there is no legal definition of the term financial advisor. In other words, basically anyone and everyone can use the term. And yet, most clients are not aware that the term financial advisor does not stipulate the ethical standards under which the advisor must operate.

A 2019 survey by wealth manager Personal Capital revealed that almost 50% of Americans incorrectly believe that all advisors are legally bound to act in their clients’ best interest. Unfortunately, this creates a situation in which many clients unknowingly pay for financial advice from advisors who are free to put their own interests in front of their clients. In actuality, only financial advisors who are fiduciaries are obligated to act in their clients’ best interests.

What Is a Fiduciary?

A fiduciary is a person or entity that has the power to act on behalf of someone or something else. Essentially, a fiduciary must act as if they are who they represent and make decisions that are in that person’s best interest.

The most well-known example of a fiduciary is a trustee of a trust. In this case, the trustee or fiduciary has discretionary authority over the assets in the trust. Similarly, a fiduciary financial advisor has the authority to buy and sell securities in an account on the client’s behalf without their express consent. For this reason, fiduciaries are held to a higher standard than nonfiduciary advisors.

What’s the Difference Between a Fiduciary and a Financial Advisor?

The difference between fiduciary and financial advisor lies in the definition of the terms. A person who advises others regarding their finances can be either a can be either a fiduciary financial advisor or a nonfiduciary financial advisor. A fiduciary, however, must act in their client’s best interest. And they don’t have to be financial advisors. They can also be attorneys or guardians or trustees or other professionals.

What’s the Difference Between the Fiduciary Standard and the Suitability Standard?

On account of the Department of Labor ruling, we now have two different standards in the financial industry: the fiduciary standard and the suitability standard. The problem becomes even more pronounced when brokerage firms fail to mention which standard they are working under.

The main difference separating the fiduciary standard and the suitability standard lies in how an advisor makes his or her decisions. Prior to making a recommendation, a fiduciary must go through a thorough process to determine a client’s best interest. They must also explain the recommendation in detail to their client, so there’s no misunderstanding about it and the reason for the fiduciary to suggest it.

For financial advice to meet the suitability standard, the advisor need only have sufficient reason to think that it meets the client’s financial needs. Basically, the advisor would only need adequate information regarding the investment and his or her customer’s finances prior to making the recommendation.

Suitability Standard and Conflicts of Interest

Clearly, the suitability standard doesn’t require the same level of discussion as the fiduciary standard. Moreover, it does not ensure that advisors put their clients’ best interests ahead of their own; it also does not preclude any conflicts of interest.

A nonfiduciary can direct clients towards products that line his pocket, as long as they could be suitable for them. A fiduciary, on the other hand, can’t recommend a higher commission product because paying more in fees wouldn’t be in the client’s best interest.

Although not every advisor under the suitability standard is putting their needs before their clients, it’s critical to know that they are allowed to legally. Furthermore, the compensation structure and incentives at their firm may result in conflicts of interest.

Anytime you involve someone in your personal finances, you are placing a great deal of trust in them. Thus, it’s important to know the type of financial services you need and to find the right type of financial professional to provide them. Regardless of the type of financial advisor you choose, you need to be clear about how they make their money and the value they offer for what you pay them.

Standard
financial advisor
Financial Advisor, Financial Services, Investing, Personal Finance, Retirement

Should I Hire A Financial Advisor

Making long-term decisions about money can be difficult and even a little scary. But with the help of a financial advisor it doesn’t have to be. Many people turn to financial advisors for help with their financial decisions. Getting educated about your retirement and wealth-management options is a necessary part of planning your financial future. Advisors offer good financial advice but deciding whether they’re worth the price can be difficult. Before deciding to consult with an advisor make sure you are aware of the pros and cons, whether you’re looking for advice on paying off debt or investing your extra income.

What is a Financial Advisor?

Financial advisors are certified professionals who help their clients tackle some of the tough questions of personal finance. They can put together a retirement savings plan with a timeline or answer any questions you may have about life insurance. A Certified Financial Planner is often not only knowledgeable about investment accounts, but other things that could impact your finances, from taxes to insurance. A few of the things that a CFP can handle for you are: meet with you to assess your current financial situation and goals; develop a comprehensive plan that addresses major areas of concern, such as retirement, college planning, insurance, avoiding estate tax, and so on; coach you as difficult financial issues appear in your life; and help you avoid major mistakes that will derail your plans.

Risks of Self-Managing

When thinking about the need of a financial advisor, think about all that you must handle on your own when it comes to your finances. You will need to compare Roth IRA providers and fill out the necessary information to open a Roth IRA. Now that you have opened the account you need to stay on top of a wide range of information such as: changes in legislation that could affect your retirement planning; changes in mutual fund options at your brokerage firm; and changes in the amount of money you can contribute each year to a retirement account. You will also need to develop a long-term financial plan that includes considerations for retirement, paying off your house, funding the kids’ college education, estate planning and a timeline for when you retire. This is something that can be done, but to get it done right you’ll need to invest a lot of your time. It’s up to you to decide if self-managing is convenient for you.

The Help of a Financial Advisor

If you’re ever feeling confused, stressed or simply ignorant of various money-management topics, then professional advice from an advisor can be very handy. Most people can’t see far enough into the future to see retirement, much less plan for it. A financial advisor will ask you all the needed questions to put together a plan and offer you advice on investments, estate planning, tax liability and your kids’ college education. The financial knowledge of an advisor will make your difficult decisions easier.

How a Financial Advisor Can Hurt

Finding a great advisor can be just as easy as finding an incompetent one that can cost you a lot of money. A few of the many ways a financial advisor can cost you your money is by churning your investments; expensive investments; bad planning; and not responding. They can get you to buy and sell more than necessary in order to generate higher commissions for themselves. Point you to mutual funds with high expense ratios when a similar low-cost index fund or an Exchange Traded Fund (ETF) would be a better choice. A well-intentioned advisor who puts together a sketchy or holes-ridden financial plan is not helping you at all. Even an unbiased advisor is useless if he or she never returns your calls/emails or is MIA when your need arises.

You Should Always Get a Fiduciary

When hiring a financial advisor, you need to make sure they have a fiduciary duty to you. This means your advisor must put your needs above his/her own and always act in your best interest, offering you an unbiased view and opinion. In financial planning this guarantees that he cannot steer you toward investments that are expensive for you, just because their profitable for him/her.

How Much is the Cost of a Financial Advisor?

 Going to a financial advisor will cost you money. Some charge by the hour and some makes commissions from the investment products you buy. Others may do both. Most fee-only investment advisors charge a fee equal to a percentage of your invested assets. An unofficial industry benchmark is one percent, although advisors may charge slightly more or less. Some financial advisors earn their fees not from clients, but from banks and investment companies.

If you’re wondering if you need a financial advisor or if you should do it yourself, consider whether DIY investing is a realistic option. What changed so you now feel you can devote more time and energy to your investments than you have before? Do-it-yourself can easily turn into no-one-does-it. We all have a home project or two to prove it. So if your to-do list is endless and you never quite have time to tackle your personal finances, you might need a financial advisor.

Standard
Insurance
Financial Advisor, Insurance Brokers, Investing, Personal Finance

What is Financial Advisor Job?

It’s hard to get your ducks in a row and set financial priorities when you are just getting started on a career, especially if you have huge student loans, which take a big bite out of your paycheck.  Plus there are other expenses that make it difficult to save for the future.  If you’re lucky, your employer sets you up with a 401(k) and continues to make contributions on your behalf – hopefully you are matching those contributions, and, if not, you’re setting a little money for the future, right?  Perhaps you’ve been savvy enough to plan for the future, and, have a nest egg above and beyond that small “rainy day account” for financial emergencies.  Or, maybe you live paycheck to paycheck and need someone to implement an investment plan for your future.  Finally, if you won that big Power Ball jackpot the last go around, it might be time to seek a consult with a financial advisor.  Whether your monetary status is too little or too much, a financial planner can assist you in planning for the future.
Continue reading

Standard
Car Insurance, Insurance, Personal Finance, Types of Insurance

What Are The Types of Car Insurance?

Car Insurance
Nothing compares to your “first set of wheels”, no matter how many years that you are a vehicle owner.  Everyone remembers their first car, whether it was a hand-me-down from Dad, or an old clunker you got dirt cheap that ran.

The biggest downer about owning your first car, or your current car for that matter, is not the amount of money you must pay for maintenance and gas for the vehicle, but the funds you expend to insure it.

But today’s cars are not your Dad’s car from back in the day.  He may have just buffed out a mark where someone keyed the car or nicked the bumper.  Today, just a wayward grocery store cart that slammed into a tail light or a minor or major collision may not only mess up the exterior of the car, but the electrical system may also be in peril too, thus repair costs will skyrocket.  That is why you should be wise about what type of coverage you need for your vehicle.
Continue reading

Standard
financial advisor
Financial Advisor, Financial Services, Investing, Personal Finance, Retirement

The Pros and Cons of Hiring a Financial Advisor

Making long-term decisions about money can be difficult and even a little scary. But with the help of a financial advisor it doesn’t have to be. Many people turn to financial advisors for help with their financial decisions. Getting educated about your retirement and wealth-management options is a necessary part of planning your financial future. Advisors offer good financial advice but deciding whether they’re worth the price can be difficult. Before deciding to consult with an advisor make sure you are aware of the pros and cons, whether you’re looking for advice on paying off debt or investing your extra income.

What is a Financial Advisor?

Financial advisors are certified professionals who help their clients tackle some of the tough questions of personal finance. They can put together a retirement savings plan with a timeline or answer any questions you may have about life insurance. A Certified Financial Planner is often not only knowledgeable about investment accounts, but other things that could impact your finances, from taxes to insurance. A few of the things that a CFP can handle for you are: meet with you to assess your current financial situation and goals; develop a comprehensive plan that addresses major areas of concern, such as retirement, college planning, insurance, avoiding estate tax, and so on; coach you as difficult financial issues appear in your life; and help you avoid major mistakes that will derail your plans.

Risks of Self-Managing

When thinking about the need of a financial advisor, think about all that you must handle on your own when it comes to your finances. You will need to compare Roth IRA providers and fill out the necessary information to open a Roth IRA. Now that you have opened the account you need to stay on top of a wide range of information such as: changes in legislation that could affect your retirement planning; changes in mutual fund options at your brokerage firm; and changes in the amount of money you can contribute each year to a retirement account. You will also need to develop a long-term financial plan that includes considerations for retirement, paying off your house, funding the kids’ college education, estate planning and a timeline for when you retire. This is something that can be done, but to get it done right you’ll need to invest a lot of your time. It’s up to you to decide if self-managing is convenient for you.

The Help of a Financial Advisor

If you’re ever feeling confused, stressed or simply ignorant of various money-management topics, then professional advice from an advisor can be very handy. Most people can’t see far enough into the future to see retirement, much less plan for it. A financial advisor will ask you all the needed questions to put together a plan and offer you advice on investments, estate planning, tax liability and your kids’ college education. The financial knowledge of an advisor will make your difficult decisions easier.

How a Financial Advisor Can Hurt

Finding a great advisor can be just as easy as finding an incompetent one that can cost you a lot of money. A few of the many ways a financial advisor can cost you your money is by churning your investments; expensive investments; bad planning; and not responding. They can get you to buy and sell more than necessary in order to generate higher commissions for themselves. Point you to mutual funds with high expense ratios when a similar low-cost index fund or an Exchange Traded Fund (ETF) would be a better choice. A well-intentioned advisor who puts together a sketchy or holes-ridden financial plan is not helping you at all. Even an unbiased advisor is useless if he or she never returns your calls/emails or is MIA when your need arises.

You Should Always Get a Fiduciary

When hiring a financial advisor, you need to make sure they have a fiduciary duty to you. This means your advisor must put your needs above his/her own and always act in your best interest, offering you an unbiased view and opinion. In financial planning this guarantees that he cannot steer you toward investments that are expensive for you, just because their profitable for him/her.

How Much is the Cost of a Financial Advisor?

 Going to a financial advisor will cost you money. Some charge by the hour and some makes commissions from the investment products you buy. Others may do both. Most fee-only investment advisors charge a fee equal to a percentage of your invested assets. An unofficial industry benchmark is one percent, although advisors may charge slightly more or less. Some financial advisors earn their fees not from clients, but from banks and investment companies.

If you’re wondering if you need a financial advisor or if you should do it yourself, consider whether DIY investing is a realistic option. What changed so you now feel you can devote more time and energy to your investments than you have before? Do-it-yourself can easily turn into no-one-does-it. We all have a home project or two to prove it. So if your to-do list is endless and you never quite have time to tackle your personal finances, you might need a financial advisor.

Standard
Financial Advisor, Financial Services, Personal Finance, Retirement

When It Makes Sense to Hire a Financial Advisor

time is money

By now, many of us have seen the TD Ameritrade commercials with the bearded bespectacled financial advisor questioning his client about her plans and where she’d like to be when she retires. The client usually throws in some unexpected adventure or bucket list idea that has been in the back of her mind for a few years that nobody would guess just by looking at her. What many people need to consider before getting to this point, however, is whether their situation warrants hiring an advisor. In other words, before you wind up sitting on a couch speaking about running with the bulls someday, you should know when it’s worthwhile to seek the help of a financial professional.

My Finances Aren’t That Complicated

Understandably, many people have reservations about hiring someone to manage their money. Usually, they think that their finances aren’t complicated enough to justify outside help. While this is true for many people, it is certainly not always the case. Even a seemingly simple financial situation may be missing out on numerous opportunities to grow wealth and protect one’s assets.

For example, a widow in her late sixties with a sizable estate left to her by her husband may think that she should just continue with her husband’s financial choices because they yielded a pretty good return up to this point. However, life changes usually bring up an entirely new set of questions. Is she still paying for kids’ college educations? What kind of income does she need now to continue to live comfortably in retirement? Did her husband own a number of stocks which could be sold to offset other capital gains? Did he keep a large amount of cash in savings accounts earning very little, if anything? These are just some of the questions a person in her situation may need to consider.

The Big Picture

Have you ever heard someone talk about how they couldn’t see things clearly because they were too involved in the situation? Personal finances often fall along the same lines. Many people are uncomfortable talking or even thinking concretely about their own financial situations. One of the great benefits of a financial advisor is that he can see the big picture more clearly because he is outside the situation.

Since an advisor is not emotionally connected, he can look at your entire financial situation and figure out what challenges must be met in order to achieve your goals. For instance, he might notice when the interest on a car loan is greater than the interest you are getting on your savings account. In this case, he might advise you to pay off the loan with your savings, so you can start building capital right away without losing money by servicing long-term debt at higher interest rates than your savings account accrues.

Is an Advisor Worth the Fee?

This is one of the main questions people have when considering financial assistance nowadays, and I have to say it’s a valid concern. While there are different types of compensation models, many advisors charge a percentage of the assets under management. This fee usually ranges from 1% to 1.5% per year. Clearly, your advisor needs to add value over and above his fee to make his services worthwhile. After all, Warren Buffett has made no secret of how much fees matter to your bottom line and how you should keep your investing costs as low as possible.

The Financial Upside

The good news is that a Vanguard Alpha study recently uncovered that using a financial advisor may add as much as a 3% net gain over time to a portfolio. In other words, after paying their fees, the client winds up with 3% more than they would have had without using an advisor. This percentage may not sound like much but a 10% gain vs. a 7% gain in your annual return can result in a huge difference to your portfolio. While not everyone will see those exact gains, even a 2% gain can result in a healthy additional return over time.

In the End, It’s Personal

People often need help when changing jobs and moving retirement accounts, assessing long-term care insurance, or even deciding whether it makes sense to lease or buy your next car. These are just a few of the situations for which people are often not prepared or simply cannot deal with at the time. A skilled financial advisor, however, can look at your investment options objectively in order to plan for your future. Ultimately, the decision to hire a financial professional remains a personal one. You have to be honest about what your needs and your goals are at this point in your life, and whether the assistance an advisor provides is necessary to reaching those financial goals.

Reference

https://www.thestreet.com/personal-finance/when-is-it-worth-it-to-work-with-a-financial-advisor-14631145

Standard
Financial Advisor, Financial Services, Personal Finance, Retirement

What Baby Boomers Should Know About Retirement

Financial AdvisorWhile baby boomers probably remember their first few days in the workforce, they are steadily working their way towards retirement. And it’s coming quickly! However, many baby boomers are a part of a smaller subset of their generation who do not really know how to prepare for retirement, or how to take advantage of that preparation. This article does not aim to be the definitive resource on retirement, but it does address several mistakes that baby boomers make that limit the amount of resources at their disposal when they enter retirement. So, here are a few tips and tricks according to a top top NJ financial advisor on how to avoid those missteps and better educate this generation on how to retire right.
Continue reading

Standard
Financial Advisor, Financial Services, Investing, Personal Finance, Retirement

8 Ways to Retire Before 65

InsuranceThough practically everyone views the number 65 as the magical age at which they will retire and start living the life they always wanted to, who says that 65 has to be the precise age to retire ? Why not 55 or even 45? While many people may feel that retiring early, even by just a few years, is an unrealistic expectation, this definitely does not have to be the case. Instead, consider making a few small lifestyle adjustments that will have significant, positive financial impacts later in life.  Prior to consulting with a financial advisor in NJ,

consider the following eight steps which will help to save the most money for an early retirement.
Continue reading

Standard
Financial Advisor, Financial Services, Personal Finance

How Do Financial Advisors Make Money?

How Do Financial Advisors Make MoneyYou don’t have to be in the ranks of a billionaire or move in the same circles as Warren Buffet, Bill Gates or Donald Trump to have a financial advisor.  Anyone who wants to ensure that when they are ready to retire they have a substantial nest egg, and enough money put away in the event of a financial hardship should speak to a financial planner.  As prudent as you might have been about saving money through your working years, it is still a savvy move on your part to take the time to consult with a financial advisor to see what magic he or she can work for you and your finances, especially the closer you inch to your “golden years”.  If you live in the New Jersey area and are looking for a top financial advisor you should contact John Savadjian.  John Savadjian is a highly regarded insurance broker and financial advisor in NJ.
Continue reading

Standard
Financial Advisor, Insurance Brokers, Investing, Personal Finance

What Does a Financial Advisor Do?

Financial AdvisorIt’s hard to get your ducks in a row and set financial priorities when you are just getting started on a career, especially if you have huge student loans, which take a big bite out of your paycheck.  Plus there are other expenses that make it difficult to save for the future.  If you’re lucky, your employer sets you up with a 401(k) and continues to make contributions on your behalf – hopefully you are matching those contributions, and, if not, you’re setting a little money for the future, right?  Perhaps you’ve been savvy enough to plan for the future, and, have a nest egg above and beyond that small “rainy day account” for financial emergencies.  Or, maybe you live paycheck to paycheck and need someone to implement an investment plan for your future.  Finally, if you won that big Power Ball jackpot the last go around, it might be time to seek a consult with a financial advisor.  Whether your monetary status is too little or too much, a financial planner can assist you in planning for the future.
Continue reading

Standard