Category Archives: Fiduciary

A Fiduciary Is Your Friend

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Fiduciary.

Now that’s a scary sounding word – what the heck does it mean?

It’s about your finances and believe me – ‘fiduciary‘ is your friend. The definition of this word is “involving TRUST, especially to the relationship of the trustee and a beneficiary.”

When you are ready to invest your money in places like the stock market, IRA’s or annuities, and are looking for a financial advisor for assistance, it is in your best interest to ask if it comes with a FIDUCIARY DUTY on their part. This means they will manage your assets FULLY for your benefit and NOT for their own profit.

In other words – their M.O. (see below) is to work in your best interests above all others, including themselves – they want what’s best for your money to be their number on motivation.

Now don’t get me wrong, the institution or person should get paid for their expertise but they shouldn’t be getting additional money from these investments by steering your hard earned money over just to them. So don’t hesitate to ask!

Sidebar – What the heck does M.O. mean you ask? While some may think M.O. means motive, it is actually the abbreviation for the Latin term modus operandi, which means way of working, or method of operation.

Fiduciary

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Today’s secret word – Fiduciary!

Now as words go, this detective finds that word to be a long…and maybe a little intimidating.

But when it comes to your finances, fiduciary is your friend! The definition of the word is “involving TRUST, especially to the relationship of a trustee and a beneficiary.”

In my line of work, trust is a big deal! In the world of money and financing, it establishes how the relationship between you and a financial advisor or institution works.

Here’s a case – Mark wanted to put the money he is saving in his IRA for retirement in a mutual fund. He asked a financial advisor for advice on which fund to purchase. The advisor gave him a couple of choices, but when Mark investigated the funds closer, he discovered that the funds carried high fees. Which would mean, he might make less on his investment over time.

Now there was nothing wrong with the funds the financial advisor recommended, but most likely the reason he recommended them was because the advisor would profit from the sale of the mutual fund to Mark – probably in the form of a commission. Which means that the advisor has some ‘skin in the game’ when it comes to selling something to Mark. The advisor is working in both his own and Mark’s interests – and just so everyone understands, there is nothing illegal about this, in fact, it’s quite common.

But if Mark had an advisor with a FIDUCIARY DUTY on his behalf, that advisor would be required to ONLY act in Mark’s best interests.

A fiduciary is expected to manage the assets FULLY for the benefit of the other person rather than for his or her own profit.

TRUST me, take this detective’s advice – when you are asking for financial advise, also ask whether the advise comes with a FIDUCIARY DUTY,

April is National Financial Literacy Month, Detective Frank Money’s favorite month! Let’s all celebrate by becoming more financially aware!