Does Your Financial Adviser Put Your Interests Before Their Own?

Does Your Financial Adviser Put Your Interests Before Their Own?

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When you discuss your retirement funds with your financial adviser, you expect they make recommendations that will earn you the most money, right?

This is not always the case. Financial companies frequently pay advisers to recommend specific products. If the product will result in less money for you, but more for them, they are not legally required to recommend the product that would benefit you.

Americans lost an estimated $17 billion in 2015 because financial advisers made recommendations that served their own interests before their clients’. (From the THE EFFECTS OF CONFLICTED INVESTMENT ADVICE ON RETIREMENT SAVINGS Report by the President’s Council of Economic Advisers)

On April 10th, a new law will go into effect that requires anyone who provides retirement advice to become a “Fiduciary.” Being a Fiduciary means they must put your interests above their own. If they don’t, you will have legal recourse.

Investment firms are scrambling to make massive changes to their fee structures to prepare to become fiduciaries. Many in the financial world are spreading fear about the new law, saying that individuals who earn less will no longer be able to afford investment advice. Advisers are claiming the only way they can continue to provide advice is if they can take these offers from financial companies and accept higher commissions even if it hurts you.

If this seems absurd to you, it’s because it is. If Americans cannot afford financial advice that is in their best interest, they certainly can’t afford advice that would cost them tens of thousands of dollars in the long run!

Unfortunately, some of the larger banking companies are predicting that President Trump is going to postpone this rule in order to please large companies on Wall Street. Advisers will be able to continue to make retirement investment recommendations that aren’t best for you.

Even if the rule does go into effect, it only applies to retirement account investments. Any other investment advice is not protected.

The only way to ensure your adviser is putting your best interests before their own is to ask them a simple question: “Are you a fiduciary?” If they hem and haw and explain why it’s better for you that they are not, it’s time to find a new adviser. If they say yes, you can move forward with confidence that your financial interests are their priority, rather than their own.

Due to all the misconceptions around the fiduciary rule, formally called the “Conflict of Interest Rule,” we are providing a FAQ series on our Facebook page. Please join us here to understand some of the major myths surrounding the rule.

At Castle Rock Investment Company, we’ve committed to being a fiduciary since we opened 10 years ago. Whether or not the rule is postponed, we will continue to be a fiduciary. We put our clients’ interests before our own whenever providing recommendations, not just retirement accounts. We charge flat fees (and we’re now introducing a less expensive subscription model for individuals just starting out investing that is 50% less than our project based fees!). We value transparency; you will always know how much you’re paying.

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This guest post was provided by Castle Rock Investment Company. Make sure to “Like” them on Facebook if you found the above content useful.

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Melissa Popp is Director of Digital Engagement for Altitude SEO, a boutique agency helping small businesses win with content online. As a digital strategist with a passion for technology and travel, she coaches her partners to connect with their audience through experience optimization, with the goal of retaining more loyal visitors, creating brand ambassadors, and increasing conversion goals. She can be found online writing for About Travel, TechNorms, and The Emmys. Past clients include Microsoft, Hewlett-Packard, and Samsung.