Consumers need to be careful about who gives them financial advice and at least know whether that advisor gets a kickback for recommending a certain stock, insurance or investment tool.
That?s the message that the National Association of Professional Financial Advisors wants to drill into the minds of consumers.
The association recently launched a nationwide media campaign called “Focus on Fiduciary.” It will include advertising in publications, public service announcements on radio and outreach to news organizations.
“Financial advisors who are held to a fiduciary standard are legally required to act in the best interest of a client,” said Peggy Cabaniss, chair of the association.
“Those who do not hold themselves to a fiduciary standard fill the role of a salesperson,” Cabaniss said.
In the case of financial advisors, the fiduciary would be the person giving the financial advice and the client would be the person receiving the advice, said Andrew “Drew” Tiganell, owner of Financial Consulate Inc. in Lutherville, Md.
The National Association of Professional Financial Advisors is the largest association of “fee-only” financial advisors, with about 1,300 members.
The association wants to distinguish its services from those offered by brokerage firms and insurance agents. As fee-only, the advisor?s compensation is strictly the fee paid by the client.
“A fiduciary standard means the advisor is putting their client?s interest first,” Tiganelli said.
“Lawyers and doctors are held to fiduciary standards. You don?t want a doctor who recommends a certain medicine because they get $50 for each referral,” Tiganelli said.
Often consumers don?t realize that a brokerage firm may recommend a certain stock or group of stocks over another because of commission fees, Tiganelli said.
Fee-only professional financial advisors offer a variety of financial advice and their fees can range from about $100 to $150 per hour to $10,000 for a year?s worth of complicated, all-encompassing financial advice and handling of accounts, Tiganelli said.
But what about the client who is well-versed on personal finance and seems to know what?s best for their money?
For those consumers, a fee-only financial advisor can act as a back-up to check the consumer?s financial decisions and, if the consumer is part of a couple, make sure that both partners fully understand the financial choices, the association said.
“We work with clients on a long-term basis,” Tiganelli said.
MORE INFORMATION
» Fee-only advisors should not urge clients to invest in vehicles that are in the advisor?s best interest.
» The National Association of Professional Financial Advisors was founded in 1983.
» Visit www.napfa.org for more information and to locate a fee-only financial advisor.
