Stewart Group is a Fiduciary. Here’s Why That Matters.

At Stewart Group, our number-one goal is helping you accomplish your financial goals. It’s that simple. This isn’t something we say because it sounds nice; we say it because we’re a fiduciary. 

A fiduciary is defined as an individual, such as a financial adviser or financial services firm, who is managing the assets of another person and stands in a special relationship of trust, confidence or legal responsibility. A fiduciary financial adviser cannot collect any commissions from the sale of investment products. 

When a client works with a fiduciary financial adviser, he/she gives the adviser his trust and expects recommendations to be made with honesty and good faith in keeping with his/her best interests, which may not always be the case with a non-fiduciary adviser.

 
 

Click on the below links to read more about the fiduciary duty and how to identify a fiduciary

The Fiduciary Standard

Financial advisers fall into two buckets, fiduciaries and non-fiduciaries. When a financial adviser has a fiduciary duty, which is the highest standard of client care, it means that they must always act in the client's best interest, even when it's in opposition to theirs.

Contrary to popular belief, not all financial advisers have a requirement to put the client's interests first, and it can be difficult when the adviser works for a company that provides investment products and incentivises the adviser, through commissions, to sell them to clients.

To exercise fiduciary duty means that the adviser must recommend the best product options to clients, even if those products result in reduced or zero compensation for the adviser.

Financial professionals who aren't fiduciaries are held to a set of standards known as the "suitability standard."

This means that the financial adviser needs to have nothing more than an adequate reason for recommending certain products or strategies, based on obtaining adequate information about the investment and the client's financial situation, other investments, and financial needs.

How does working with a Fiduciary Investment Adviser affect you?

One of the key differences between working with a fiduciary financial adviser and a financial professional bound only by the suitability standard is the depth of conversation each has with their clients.

Before recommending a product or strategy, a fiduciary uses a targeted and prudent method to discover their client's needs and best interests. After presenting recommendations, a fiduciary will thoroughly cover the rationale behind the recommendations and ensure that the client completely understands, leaving no room for misinterpretation or misunderstanding.

A non-fiduciary financial professional is not required to have this same depth of conversation, and any duty they have towards a client's investments may well end as soon as they place a trade or get the client to sign on the dotted line. These types of advisers have no obligation to keep tabs on the client's financial situation or account status going forward.

Tips to protect your portfolio

The best way to protect your investments is to learn as much as you can about your own investing needs, understand how to uncover expensive fees and hidden costs on investment products, and know how to spot a fiduciary versus a non-fiduciary adviser.

Fiduciary advisers will still cost you money, but they'll disclose their fees and you'll pay them separately, instead of having fees taken out of the earnings on your investments, such as commissions and performance fees.

If you want to work with a fiduciary, you can:

  • Look for advisers with AIF® (Accredited Investment Fiduciary®) designation

  • Check your adviser's disclosure statement, or just ask them if they're a fiduciary

  • Locate fiduciary advisers by searching for fee-only advisers. Any talk of commissions means they're not a fiduciary

  • Go to Fi360 Pacific website and look for a fiduciary in their ‘Designee Search’ directory

Ultimately a verification of an advisory firm by CEFEX, an independent global assessment and certification organization, is the perfect way to prove an advisory firm’s approach is robust and trustworthy.

Non-fiduciary advisers are not necessarily looking to take advantage of their clients, and if you have an adviser you like and trust, have an open discussion of fees and commissions with them, and how much those costs are impacting the earnings on your retirement portfolio each year. The real questions are:

  • Does my adviser have a documented process which adheres to the industry’s best practices?

  • Is my adviser being the best professional?

  • Who is verifying the above two for me?