Find A Comprehensive, Fee-Only Fiduciary
A “Financial Advisor” can come in many different shapes and sizes. A Financial Advisor is defined as someone who “provides financial advice or guidance to customers for compensation.” Talk about a broad definition! Every time I tell someone I’m a “Financial Advisor” I leave the conversation thinking to myself “man, I hope they didn’t interpret that term the wrong way.” Do they think I sit behind my computer all day and pick individual stocks trying to beat the market and provide crazy high returns for my clients? Do they think I sell some sort of product like an annuity that could lock up their money for years with huge surrender penalties? Do they assume that I get paid every time a change is made in their account?
For the record, all of these assumptions are false based on the way we operate here at Landmark Financial Advisors.
After countless times answering the question “What do you do, Casey” in my head, I finally came up with an answer that is informative and mysterious at the same time. I’m a “Comprehensive, Fee-Only Fiduciary.” If that doesn’t spark a follow up question then the person I’m talking to must not have really cared what I do in the first place.
Now that I’ve decided how I’m going to answer the dreaded question “what do you do”, lets break down the three components that make up a Comprehensive, Fee-Only Fiduciary.
Part 1 – Comprehensive
As Comprehensive Financial Advisors, we dive as deep into our clients’ financial lives as they will let us. At Landmark, we assist our clients in 5 major areas; Investment Planning, Wealth Enhancement, Wealth Protection, Wealth Transfer, and Charitable Giving. In layman’s terms, we help our clients grow, protect, gift, and transfer their assets to the next generation in the most efficient way possible.
So why is it so important to us to know every detail of our clients’ financial lives? We believe that it is impossible to make good, sound, financial decisions without taking all information into account. It is common for individuals to have different people handling their investments, taxes, insurance and estate planning needs. In most cases, these different professionals have no interaction with one another.
At Landmark, we act as the quarterback of our clients’ financial lives. It is our job to make sure all of our clients’ advisors are on the same page and trying to achieve the same goals for their families. In our opinion, being efficient is invaluable when it comes to our client’s financial lives.
The best way to ensure that clients’ wishes are carried out and to achieve financial independence is to have a Comprehensive Financial Plan.
Part 2 – Fiduciary
So what exactly is a fiduciary? In short, a fiduciary is someone who is required to act in the best interest of their clients. This seems like a pretty reasonable thing to ask doesn’t it? Well, until the Department of Labor rolled out their new “Fiduciary Rule”, the majority of advisors were not held to this seemingly normal standard.
Before the new rule came about, most advisors were required to follow what was commonly referred to as the suitability rule. This rule states that an investment has to be suitable for the investor at the time it is recommended. There was no requirement that advisors follow up with clients and monitor their investments to ensure that they are still suitable down the road. If a client has a life event causing their financial situation to change, advisors following suitability have no responsibility to revise their clients’ investment allocation.
When you think about the difference between the two terms, fiduciary and suitability, shouldn’t all advisors act as a fiduciary? Wouldn’t you think that every advisor acts in the best interest of their clients at all times? Unfortunately that often isn’t the case, which is why so many firms and advisors are opposed to the new Fiduciary Rule.
Part 3 – Fee-Only
The financial industry is notorious for having gray areas when it comes to advisor compensation. At Landmark we have taken all of these gray areas out by going with a Fee-Only compensation method.
In our case, Fee-Only means that the only way we get paid is by our clients. We charge an annual fee (taken out quarterly) based on the assets that we manage. We do not receive any commissions from trades, kickbacks from mutual funds, or any other type of compensation that is common in the industry.
To us, being a Fee-Only firm means that the only thing we ever sell to our clients is ourselves and our process. Our clients never have to worry about us putting them in a mutual fund that pays a 12b-1 fee (kickback to the advisor), or pushing an insurance policy on them so we receive some sort of commission. Being Fee-Only allows us to sit on the same side of the table as our clients 100% of the time. If an advisor gets paid in multiple ways it is hard to justify that they are always acting in the best interest of their clients. Advisors may be incentivized to push one product over another due to a higher compensation amount.
At Landmark we take pride in being transparent about fees. It is important that our clients know exactly what they are getting for their money. After all, every fee you pay affects your return in the long run.
At Landmark, we have been acting as fiduciaries for our clients since our company was founded in 2001. Our wealth management process helps clients make informed decisions that are in their best interest, with the goal being financial independence.