Financial services and financial advising are notorious for their industry jargon.  And many times, consumers like you can get lost in the confusing acronyms (IRA, CFP,SEC, etc.) not to mention the sea of Greek letters and measures that define investment performance (beta, alpha, standard deviation, etc.). Well, in recent years, there’s a new sheriff in town, and folks from one end of the financial media to the other are talking about the latest big financial word: fiduciary.

The truth is, "Fiduciary" has been around for a long time.  And while there are lots of legal ways to define it – and legal definitions vary between regulators who oversee the financial services industry – we’re interested in one definition: an advisor who is contractually required to act in your best interests.  We call it the “same-side-of-the-table” role. And it’s a role we’re really serious about at Trilogy Financial.  

Whether you choose Trilogy Financial as your advisor partner, we want to give you the tools to evaluate your financial strategy and the people who support your financial journey.  In that spirit, here are five questions we think are critical in making sure you are working with a “same-side-of-the-table” advisor.

    1. How do you get paid?
      While a fiduciary advisor can get paid by commission (a fee paid up-front for selling a product) on investment products, most don’t.  We encourage you to look for a financial advisor who gets paid in two primary ways (a) Flat Fee for Consulting and/or (b) a Percentage of Assets under Management for Portfolios they build for you.
    2. How will I know what I’m being charged?
      Fees should be transparent.  If it is complicated or difficult for your advisor to explain your fees, if those fees are not easy to see on regular statements or reporting, you might want to be concerned. When our clients hire us as their DecisionCoach, they know from the outset what those fees pay for and how they will be charged.
    3. How will we make decisions over time?
      We have concerns about financial plans that come across as “one-and-done.” There are times and places to pay for a one-time financial plan, but too often in our industry, product salespeople sell complex financial instruments that earn them an up-front commission and require no long-term advice.  A fiduciary, because they are usually paid over the long term, should set up an active communication and service plan with you from the outset.
    4. How will we measure the success of our relationship?
      First, we believe that your advisor should be asking you this, not the other way around.  But if—in the unfortunate case—they don’t, you need to know.  While there are fiduciaries out there who only do investment management, we think you should be concerned if “returns” or “performance” is the answer to this question.  Advisors who are focused on returns, can sometimes encourage you to take on wrong and undue risk in order to be able to say that they’ve provided great short-term returns.
    5. Are you legally a fiduciary?
      Of course! This one is a no-brainer, but we believe not the most important. Someone can claim the legal designation of fiduciary, but we think there’s more.  Being a “same-side-of-the-table” advisor is more than just meeting regulations.  It’s building a relationship-based rapport with you, our client, and then working with you to make qualitatively better decisions over time.

If we can be of service in any way in your evaluation of your current advisor relationship or your search for a new relationship, contact one of our team members today.

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