For years, we’ve been hearing the question: “Are you a fiduciary?” The answer is simple: Yes! We revel in the question. Wescott was one of the earliest innovators in fee-only financial planning and embracing the Fiduciary Standard since our founding in 1987. It has been the foundation of our culture and philosophy.
Understanding the duties and responsibilities of a fiduciary – and how they differ from a broker or Fee-Based advisor – merits a more thorough response. We’ve addressed this topic many times, notably in 2018 in the wake of the Department of Labor’s “Fiduciary Rule” and now, as the department again updates their guidance, it’s important to revisit the question: What exactly is a fiduciary?
Defining the Fiduciary Duty
A financial advisor and a fiduciary are not one in the same. A financial advisor is a one-size fits all title for anyone who provides financial guidance, investment brokering, and wealth management plans for clients. In comparison, a fiduciary is a designation within the financial services industry that requires financial advisors and professionals to adhere to a certain set of rigorous standards, regulations, and government and industry leadership oversight. By definition, fiduciaries, also referred to as Fee-Only advisors, are required to act in the best interest of their clients, while Fee-Based advisors are only required to provide advice that is suitable to their clients. Big difference!
To better understand the difference between the two, let’s first explore compensation structures and client service standards.
Understanding Oversight and Accountability
To adhere to the Fiduciary Standard, advisors must comply to rigorous annual reporting and regulatory oversight. Wescott is a SEC-regulated firm, and is responsible for filing a Form ADV each year to disclose all critical practice and operating information. This disclosure document is provided to all new clients and made available annually to each current Wescott client. Further, all SEC-regulated firms, including Wescott, are required to create a detailed Client Relationship Summary to be made available on their website. This additional disclosure provides our clients, prospective clients, and the general public with important information in an easy to digest format. It is created and presented to ensure that we are working in the best interest of clients, avoiding any conflicts of interests, and meeting the standards required to maintain the status of a fiduciary.
Finally, as a member of the National Association of Personal Financial Advisors (NAPFA), the country’s leading organization for Fee-Only advisors, Wescott must uphold the Fiduciary Standard and adhere to governing oversight from both the NAPFA Board of Directors and Regional Boards. As part of our commitment to the organization and the standards it sets, several Wescott executives hold leadership positions within NAPFA to help advance its mission to provide financial services in the best interest of the public.
Determining What is Best for Your Needs: Asking the Right Questions
Both Fee-Based and Fee-Only (Fiduciary) Advisors provide value to their clients. And like all decisions around wealth, determining which advisory service is best for you is a multifaceted, personal choice akin to choosing a doctor. You should always ask questions about an Advisor’s certifications, their typical client profile, their approach to Investment Management and Financial Planning, and their fee structure.
With answers in hand, you’ll then align your needs with their service offerings to arrive at a decision. If you are looking for a financial professional to assist with stock picking and the recommendation of specific investment products, a broker or fee-based advisor may be the better fit. However, if you seek a more comprehensive and holistic approach to financial planning and investment management, a Fiduciary is the expert you’ll likely want to engage.
Wescott takes our Fiduciary commitment to act in your best interest a step further. Our Wealth Management Program offers comprehensive financial advice rooted in a thorough and experienced understanding of our clients’ personal needs, financial goals, and family circumstances. Wescott Advisors partner with Wescott clients to understand the facts and context of our clients’ personal mindsets and financial objectives. Both tangible and intangible components drive the creation of your custom-tailored financial plan, designed to meet your unique needs and objectives – an approach we call Life-Minded Wealth®.
We are not simply providing cookie-cutter financial and investment planning; we are tailoring our expertise to help you navigate your unique situations and expectations. Our experienced team of professionals include Certified Financial Planners®, attorneys, CPA’s, MBA’s, tax specialists, estate and divorce planners, as well as insurance and, of course, investment professionals. Additionally, our on-staff psychologist helps us help clients navigate complex family financial dynamics.
Ultimately, our goal is to remove the burden of financial uncertainty from you and shouldering it on your behalf. We understand that you’ve worked hard for your wealth, and engaging a Financial Advisor demands significant confidence. For 35 years, Wescott has proudly served as Fee-Only Fiduciary Advisors to our clients. We share in our clients’ successes, listen to their concerns, and stand by their side as twists and turns of life present themselves.
Contact us today to learn how Wescott can help you reach your goals.