Fiduciary

If you are actively searching for an individual or firm to provide you with financial or investment advice, you may be having trouble differentiating between all of the different people and firms you find when typing “Financial Advisor” into your search engine. The unfortunate truth is that anyone can call themselves a Financial Advisor and it can be very difficult to know if they are highly qualified and trustworthy.

If you search on Indeed.com for “Financial Advisor” you will find that many well-known financial firms have job opportunities for “Financial Advisor”, “Wealth Management Advisor”, “Financial Consultant” and the like. If you look closer at the job description and see “no financial experience necessary”, that should be a red flag of a firm that you don’t want to work with. Hopefully you don’t find that this is the case for the current firm that you are working with.

The majority of individuals who call themselves Financial Advisors are actually brokers (a.k.a. “Registered Representative”). They are in the business of selling products for the firm that employs them which is known as a “Broker-Dealer”. A broker’s objective is to sell you products such as life insurance, annuities, or securities. They are compensated by earning a commission each time they sell you a product. The broker’s obligation is to do what is in the best interest of the firm that they work for which does not necessarily align with their client’s best interests.

There are Financial Advisors who are registered with the Securities and Exchange Commission (SEC) or in individual states as “Investment Advisers” (a.k.a. “Investment Adviser Representatives”) who work for a “Registered Investment Adviser” (RIA). Investment Advisers have a fiduciary obligation to their clients which the SEC defines as a “fundamental obligation to act in the best interest of your clients and to provide investment advice in your client’s best interests”. This is the type of arrangement a client should want with their Financial Advisor.

Unfortunately, a lot of brokers are “dually registered” which means that they work for both an RIA and a Broker-Dealer. They have two hats they can wear when they are interacting with their clients. When they want to sell products that aren’t necessarily in the best interest of a client, they put their broker hat on. When they want to tell a client that they are acting as their fiduciary, they put their Investment Adviser hat on. Needless to say, that type of arrangement can be very misleading and make it very difficult for clients to know which hat their Financial Advisor is wearing when he/she is giving them advice.

Milestone Financial Planning, LLC is a Registered Investment Advisor and Fee Only

Because the term “Financial Advisor” has no standard definition and is unregulated, we hesitate to use the term at Milestone Financial Planning, LLC. However, because the term is so widely used and searched for by our prospective clients, we feel it is worth providing some context and discussion about it.

Milestone Financial Planning, LLC believes that we have a constant fiduciary obligation to all of our clients. Milestone Financial Planning, LLC is a Registered Investment Adviser with the SEC and all of our advisers are registered as Investment Advisor Representatives. We meet the SEC’s definition of Fiduciary.

Milestone Financial Planning, LLC is “fee only” and does not receive commissions for any advice that we give to our clients. The term “fee only” means that we are paid directly by our clients on a transparent and pre-defined payment arrangement. This type of arrangement reduces conflicts of interest because advice is not driven by commission potential. All our advisors are members of the leading fee-only professional association, the National Association of Personal Financial Advisors (NAPFA), and adhere to NAPFA’s very strong Code of Ethics.

All of our advisors are Certified Financial Planner® professionals which is the premier certification in the financial services industry. Achieving the CFP® certification requires proof of financial education and experience and we are subject to strict ongoing ethical and continuing education requirements and abide by the CFP® Board’s Code of Ethics and Professional Responsibility.

Not all CFPs® are fee-only advisors and not all fee-only advisors are CFPs®. If you want to search for an advisor who is both fee-only and a CFP® you can use the “Find an Advisor” tool at http://findanadvisor.napfa.org . You can also search for CFPs® at http://www.letsmakeaplan.org/ and screen by compensation method for “fee only”.

You can check out more information about a broker/ Registered Representative at https://brokercheck.finra.org/.

You can check out more information about an Investment Adviser/Investment Adviser Representative at https://www.adviserinfo.sec.gov/.