Consider with me the number of 300,000. Do you have any idea what this number represents? This is the approximately the number of people in this country who are licensed to manage your life savings. In other words, that’s the number, the approximate number of people in our country that call themselves financial advisors.
I would argue that one of the most important financial decisions you have to make for your retirement – to live a successful retirement – is who you choose to work with as your financial advisor. The financial advisor you choose to work with is going to influence virtually every financial decision you make. Whether it’s how you’re going to handle inflation, rising healthcare costs, taxes, how to handle your money so that it lasts as long as you need it – that person will significantly influence those decisions.
And what we’re going to learn today is a little known mistake when it comes to your retirement planning which can lead to an outcome you didn’t’ plan on. So let’s keep that in mind. Now one of the things that people often don’t understand about our industry is that there are two basic types of advisors. The first is what I affectionately refer to as “Lou the Butcher.” Lou is a good guy. You may know a butcher just like him. Runs a great little shop with lots of loyal customers. There’s nothing wrong with Lou – he’s a great guy. And what is his job? To sell meat. Lou’s job is to sell meat. If you’re interested, he will sell you meat for breakfast, lunch, and dinner.
Then, there’s “Nancy the Dietician.” Now what’s her job? Nancy’s job is to give you an overall plan that best suits your health. She’ll tell you if meat is appropriate. Hey, nothing wrong with that. But chances are, she’ll probably also say things like, “Hey, we need to watch your red meat intake, and we need to make sure you’re having a certain number of fruits, vegetables, grains and dairy.” Now in the financial industry, the reason I bring these two up is that in our industry we have two levels of responsibility to you. One level is called suitability. Essentially, many Financial Advisors fall into this camp and are a lot like “Lou the Butcher.” Basically they’re product salespeople. Their responsibility is to ensure the product they recommend meets your stated needs and objectives – nothing less, nothing more. The other level of responsibility or care is what’s known as a fiduciary. Fiduciaries have the legal, moral and ethical responsibility to do what’s in your best interest as the client.
I just imagine that if I’m in your shoes, if I’m talking to a Financial Advisor, I would assume that he or she has my interest at heart. But do they really?
There are many broker-dealer representatives who provide financial recommendations who are held to a suitability standard. At a high level, what that means is they are only required to meet the client’s needs and objectives, with no requirement to disclose their conflicts of interest. If an advisor is able to charge up-front commissions but tells you that he can just charges an advisory fee like a fiduciary, you may want to run for the hills. This could be a wolf in sheep clothing. As fiduciaries, we are required to disclose any such conflicts of interest to you our clients. By the way, the reason we talk about this and tell you this is because we are fiduciaries, and we take our level of responsibility very seriously. Call Tradewell Tax & Financial In Fort Wayne IN for a no obligation meeting. We will listen and learn what your goals are, what money means to you and if see we may be able to help.