ST. CROIX INSIGHTS

Certified Financial Planner & Fiduciary – What’s the difference

BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC

It is a great question that I receive a few times a week; what is a Certified Financial Planner? I have a financial planner, but they are not certified? I keep hearing this term also; fiduciary. What does that even mean? I’m just trying to find someone to help me make good financial decisions and I have no idea what the difference is between a financial coach, financial planner, wealth advisor, broker, fiduciary and the list goes on. Here are some questions to ask when you are looking for a financial advisor/planner or even a fiduciary so that you know the differences.

Are all financial advisors, financial coach, financial planners, wealth advisors, or brokers CERTIFIED? The answer is no. Only CFP’s (Certified Financial Planners) are certified. You have an entire education process to complete along with rigorous exams and ongoing education requirements to be at this level. It can take a year or two of education to obtain this designation. It doesn’t happen overnight. I know, because I’m a CFP. For many in my industry, coach, brokers, representative; there aren’t the same thresholds (education, number of exams, experience, criteria) to have your business card list one of those titles. If I’m searching for a financial advisor, I want to understand what all those initials mean behind their name and what was actually required to obtain that designation.

Fiduciary – that’s word that has become extremely common in the media when you talk about financial advice. One other keyword – suitability. Many brokers, representatives, advisors have to only meet a suitability standard when they make a recommendation say for a particular investment. It’s a standard that really says today it’s suitable. But they really don’t have to worry about a month or six months from now. Just at the time of “sale”.

A fiduciary has a higher standard to meet. It’s an ongoing standard. You have investment A and they need to make sure it meets that higher standard on an ongoing basis. It just doesn’t stop after the “point of sale.”

Plus, they put it in writing. They outline how they work, their processes and how they get compensated. I’d only work with someone who is a fiduciary. I want to know someone has my back and must live up to a higher standard.

Remember, not all planners are created equally. There are so many different types of financial firms or companies. Big, small, local, national, publically traded or closely held firms. Some are compensated through commission, others through an hourly or fixed rate or by a percentage of assets under management. Most financial advisors are not fiduciaries nor Certified Financial Planners. Don’t be afraid to have a meaningful conversation so you understand the differences between all these types of “advisors”.

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