Why your Financial Advisor should be an independent fiduciary
When I decided to become a financial planner in the 80s I choose to work at Ameriprise Financial (at the time was called IDS). I was paid strictly on commissions and sold only IDS products. We had very strict sales goals to be met on an ongoing basis or one would face termination. Later on, I joined a Wall Street firm that was also very cut-throat. We did only institutional business with sophisticated professionals that were highly educated and financially astute. These sophisticated professionals were experts in the investment community and needed no hand-holding.
Years later in the early 90's, I decided to return to serving individuals’ investment and planning needs. I wanted to do so without being subjected to high pressure sales quotas or sales competitions designed to push insurance and other packaged products on investors in order to maximize the company's bottom line. I choose to form an independent Registered Investment Advisor firm, which by law is held to the "Fiduciary Standard". Advisors that are fiduciaries must act prudently and put the client's interests ahead of their own vs. the "Suitability Standard" (brokers are only obligated to do what is "suitable") which other financial services professionals follow. In fulfilling the "Fiduciary Standard", all of a fiduciary's fees must be fully disclosed and transparent. It still amazes me when I ask someone what percentage or amount of fees and commissions they're paying their broker and they have no idea. With a fiduciary you know.
There are few if any conflicts of interest when doing business with an fiduciary and if there are, she/he must disclose them. An example of a potential conflict may be when the fiduciary is getting paid based on a percentage of assets managed and the advisor recommends taking a mortgage on a house and investing the rest vs. paying off the house. Salesmen/brokers aren't inherently bad; in fact, many are quite competent, but due to pressure from their bosses are forced to push what the firm wants pushed vs. what the client needs.
The bottom line is this, unless you have the time and ability to become an expert in the discipline of investing and financial planning, it pays to have a professional you can trust who puts your interests first when guiding you through the many years of change you will go through on your journey to reaching your financial goals.