A fiduciary is required by law to put the client’s best interests before his or her own or their company's best interest. It's a higher ethical and moral standard in the finance industry.

A fiduciary gives advice on your whole situation — all aspects of your retirement plan, not just your portfolio management. They try to make sure you are educated on all your options so that you can pick the best solutions for you. They are paid for advice that serves your best interests. A fiduciary is not someone who is going to sell you something just because they'll be paid a commission for it. 

Why is this important? Because someone who is not a fiduciary might try to steer you in the direction that benefits them the most. 

A banker or broker who is not a fiduciary might not tell you about no-load mutual funds, because he does not get paid when you invest in them.

It's important to know that not all financial advisors operate as fiduciaries. Anytime you work with someone who is giving you financial advice or actively managing your money, make sure that person is a fiduciary. Otherwise they have no responsibility to present you with all your options and to advise you on the choices that fit best with your retirement goals.  Bankers and brokers are not fiduciaries.  The new Department of Labor Fiduciary law, currently being challenged in the courts, came about to try to give consumers more visibility into the massive, outrageous commissions being charged by the bankers and brokers for variable annuities and non-traded REITs.  Some commissions were 8% to 12% or more!  Why would the bankers and brokers oppose this rule?  It shines the light on their “non fiduciary” practices of gouging clients with hidden fees. 

We do not sell variable annuities or non-traded REITs by choice, because it is not in our client’s best interest.  We are fiduciaries. 

A non-fiduciary advisor might use a one-size-fits-all model that tells people what to buy, when to buy, and when to sell. However, when you're heading into retirement, you have different needs from a 25-year-old.

Bankers and brokers will have you answer their “risk questionnaire”, and based on how you answer those questions you will have an asset allocation plan created for you showing a diversified assortment of mutual funds.  Then they have you sign and date an investment policy statement based on that chart, and now you can't sue them if their advice is not in your best interest — because you legally "created" that plan by filling out the risk questionnaire and signing the investment policy statement. 

Then there are the big mutual fund companies like Vanguard or Fidelity, whose business model is to create hundreds of funds to gather billions in assets. They are not going to change their business plan and go to the 10 or 15 different mutual funds that you really do need. 

Look at it this way: if you want a car and you visit a Honda dealership, guess what they try to sell you? A Honda. They won't steer you to the Chrysler dealership down the road even if they know a Chrysler will serve your needs better.

A fiduciary will never act like a car salesman. The word fiduciary comes from the Latin word for trust, and we like to say that a fiduciary is somebody that you can really trust to look out for your best interests. 

How Can I Tell If My Advisor Is Looking Out For My Best Interests In My Retirement Plan?

Use the three strikes questions when you're interviewing a financial planner, money manager, banker, or broker as a potential advisor. If they strike out on any of these questions, you know they are not acting in a fiduciary role.

Strike two is when the advisor tells you that your bond funds are for your safe money. That is ridiculous!  When interest rates are at record lows, bond funds don’t pay much and they will lose a lot of money when interest rates go higher.  Saying that your safe money should be in bond funds with rates this low is like a math teacher teaching that 2 + 2 = 5.

Strike three is when the planner trots out the 4% rule. We learned after 2008 that this rule does not work, when so many people were devastated as they watched their retirement get nailed. In 2009 the guy who invented the 4% rule publicly retracted it and said that he wouldn’t use it and even called it dangerous. If your banker or broker is still using it, they are not the right person for your retirement plan. Get up and walk out! It is financial malpractice to use publicly discredited distribution strategies like the 4% rule.

We Are Fiduciaries At Decker Retirement Planning Inc.

Decker Retirement Planning Inc. has chosen as a firm structure, to operate in a fiduciary capacity. We made that decision.  We could have operated as a Broker – Dealer and take commissions.  We chose the Registered Investment Advisory (RIA) structure, which requires us to act as a fiduciary.  We put this in writing for you: we legally obligate ourselves to act in a fiduciary role and look out for your best interests. 

As fiduciaries, we will try to identify your options. We are paid for our overall advice for the plan. We want you to receive the benefit of the stock market, and try to buffer the downside, but we don't make commissions on stocks or mutual funds.

We will never offer you a cookie-cutter approach to planning!  It typically takes five to nine meetings to create a plan for you, and, with your input, get things just right for you.

Now that you know we are fiduciaries, let’s move into a discussion of how we put your best interests front and center in building your plan.