By working with a fiduciary, you can rest assured that you will never be surprised at how much you are paying and when and how you pay.
If you decide to work with an investment professional that is not a fiduciary, you need to make certain you question every recommendation they make as it might only be recommended so the professional can make extra money.
#3. Avoid Conflicts Of Interest
Another way an investment professional acts as a fiduciary is by avoiding conflicts of interest. In many cases, this simply means to not offer products to clients that the professional earns commission on.
Another example would be to invest some of your money into bonds that support a new real estate venture that your financial professional has a stake in.
This is critical because clients can fully trust that their investment professional is acting on behalf of them and is only offering them a product or service that they truly need.
Of course, there might be instances where the bonds from the real estate venture are a good fit for you. In this case, your investment professional needs to disclose this to you upfront and you then decide if you want to invest or not.
If your investment professional was not a fiduciary, they could just invest your money into the bonds and you would never know they are doing so because they have a stake in it. If you were to find out, chances are you would begin to question the motivation behind your investment.
As you can see, working with an investment professional that is a fiduciary can make your experience much easier and more trustful. You know that any recommendation being made is in your best interest and you know how much you are paying for their advice and services.
Additionally, any conflict of interest that does come up, you will be notified before any action is taken so that you can decide if you want to move forward. This simply strengthens the trust between client and advisor.
While it is not a requirement for you to work with someone who is a fiduciary, your life will be much easier by doing so.
This article has been republished with permission from Modest Money.