The one word you should keep in mind when choosing a financial adviser is “fiduciary”, it basically refers to someone who puts your financial interest above his own. This characteristic is essential in the world of money because you will be entrusting your fortune and your financial future to the adviser you choose.

It can be challenging to find genuine fiduciaries because in most cases, advisers have a certain “suitability” standard wherein they provide an appropriate return on your investment. Take note of the word “appropriate” because most advisers are unlikely to stress themselves out in finding the “best” choice for you.

Look at this example. If you can save $10,000 for your retirement fund, the adviser can ask you to invest it in a low-cost index fund that has a potential of generating 8% returns annually. After 30 years, you will have earned $1.1 million which is a good safety net. However, look at another scenario. If the adviser recommends you to invest the money in high-cost investment mediums, you might get a 6% return annually. After 30 years, you will have around $800,000 which is obviously a lot lower compared to the former strategy.

As you can see, the recommendation of your financial adviser can significantly affect your future financial capability. Sure, the latter option, which is the high-cost investment, is “appropriate” You didn’t generate any loss after all, but you definitely netted lower than you should have compared to when you invested your money in the index fund.

If you are looking for the best return possible, you need to distinguish between genuine fiduciary and the “suitability” standard most financial advisers set for themselves. Getting an adviser who puts your interest first undeniably will provide a lot of benefits for you and your family over the long term.

Tweet This Post