While searching for an investment advisor, you may wonder how to tell the difference between them. In this article, learn three ways to differentiate advisors.
Fee-Only Compensation
Many advisors are brokers trying to sell you products. They may not be interested in what is best for your financial situation. They may be trying to earn commissions by selling products or meeting internal sales quotas. They may purposely fail to mention a less expensive alternative. How can you avoid this? Choose a fee-only advisor that is compensated solely by the fees you pay. Fee-only investment advisors in Minneapolis MN do not sell financial products like annuities, mutual funds, or insurance. Therefore, they are independent and free to focus on what is in your best interest.
Fiduciary Standard of Care
A fiduciary is an individual or organization that acts on behalf of another person, putting their client’s interest above their own. Many advisors do not operate under a fiduciary standard of care. They adhere to a suitability standard of care. A suitability standard of care requires that an advisor recommend investments that are suitable for the client but not necessarily in the client’s best interest. Look for investment advisors in Minneapolis, MN that operate under a fiduciary standard of care. For instance, Registered Investment Advisors (RIAs) are registered with the Securities and Exchange Commission (SEC) and are required by law to adhere to a fiduciary standard.
Independent
Independent advisors work only for the client. They do not represent brokerage firms or insurance companies. Therefore, investment advisors in Minneapolis, MN that are independent, are free to focus on your best interests. Look for advisors that are fee-only, fiduciary, and independent.
