How can I determine if a Financial Advisor is a trustworthy fiduciary?

I am in my forties and I haven't paid serious attention to my family's financial future until we bought our dream home several months ago. I've discovered that I need proper guidance. I am in search of a trustworthy advisor who can make logical decisions about my finances. Most importantly, someone who will work in my own interest to manage my debt strategically. I understand the limitations of seeking financial advice from friends and family. I have also had negative experience with financial advisors I've worked with in the past. How can I determine if a Financial Advisor is a trustworthy fiduciary?

Choosing an Advisor
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February 2018

I’ll try to shorten this up a bit. 3 types of advisors:

  1. Broker - Derives compensation solely from commissions on products sold. Not a Fiduciary. Adheres to the suitability standard only.
  2. Fee-Based Advisor - Derives compensation from BOTH commissions and fees for ongoing investment management, advice, planning. Adheres to the suitability standard when selling products and the fiduciary standard when providing advice.
  3. Fee-Only Registered Investment Advisor - Derives compensation from fees for ongoing investment management, advice, planning. Required by law to act in the client’s best interest 100% of the time as a fiduciary.

How will you know the difference? Simple, if an advisor has an affiliation with a Broker Dealer (check the disclosure on their website) they do not act in a fiduciary capacity 100% of the time. Obvious background checks such as being a CFP®, checking FINRA Broker Check and clearly understanding how they invest are also important.

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