Are We Fiduciaries For Your Wealth?
What is a Fiduciary and Why Choose a Fiduciary Financial Advisor?
Acting as fiduciaries, our financial advice is objective and in your best interest
Lightship Wealth Strategies, Inc., is held to a fiduciary standard, meaning that we are committed to placing our clients' interests ahead of our own. We act as the guardian of your investment future by helping you build, grow, protect, and in some cases transfer wealth for your investment portfolio and seek to achieve your individual goals and dreams.
A fiduciary is a person or institution given the power to act on behalf of another in situations that require great trust, honesty, and loyalty. Fiduciaries are hired to act in your best interest and must set aside personal motives and conflicts of interest in favor of pursuing the best outcome for your unique financial situation. Common fiduciaries include attorneys, accountants, business advisors, fee-only financial advisors, real estate agents acting on your behalf, estate administrators, guardians, title companies, and trustees of a trust.
There are very clear guidelines on who is considered a fiduciary in the financial world and who is NOT. The following people are not considered fiduciaries:
- Stock brokers
- Insurance agents
- Financial advisors who offer their own proprietary financial products.
- Real estate agents acting on the other party's behalf
What is Fiduciary Duty?
Fiduciary duty is a legal obligation of a fiduciary to act in the best interest of clients/investors.
Many brokers and insurance agents call themselves “financial advisors” or “financial planners,” but they may not have a fiduciary duty and in fact may not be required to put your interests first. They represent themselves or their company. Rather than a legal responsibility to act in your best interest, they instead must only provide you with “suitable” financial products. This “suitability standard” is very broad and difficult to impose. Fiduciary duty is far stringent than the suitability standard.
Fiduciary Duty Vs. Suitability Standard
If you go to a stockbroker for investment advice, the broker may recommend that you invest in a particular fund (Fund A) even though another fund (Fund B) may be a better choice. The suitability standard permits the broker to recommend an inferior product (which may give them a higher commission) as long as it’s a “suitable” investment. On the other hand, fiduciary financial advisors are required to recommend Fund B since it's your best option and they have a fiduciary duty to clients. It's not enough for fiduciaries to provide just "suitable" recommendations; they must provide the best advice possible. Because fiduciaries are held to such a high standard, much of the informed public make an effort to seek the advice of fiduciary financial planners.