Jennifer White, is the Director of Client Engagement for BlueSky Wealth Advisors located in Pleasanton, CA, San Jose, CA, and New Bern, NC.
The term wealth advisor has become somewhat difficult to define these days. Not too long ago, a wealth advisor was considered necessary for clients with substantial means. Usually, the advisor was only focused on the investments they were managing and selling funds so they could cushion their own bank roll. Fast forward to today, and wealth advisor takes on (or at least should take on) a whole new meaning.
Today, a quality wealth advisor should be capable of managing many different facets of your life. The definition of wealth has changed over the past few decades. It is not just determinied by the amount of equity held in your portfolio. For example, your capital may be in the form of real estate holdings, closely held businesses, or stock options in a publicly owned company. Now more than ever choosing an advisor can seem like a daunting task. One of the most critical distinctions to make is if they are a fiduciary, and equally, important understanding the difference between an advisor who is Fee-Based vs. Fee Only.
Are You a Fiduciary?
A fiduciary relationship is one founded on trust or confidence by one person in the integrity and fidelity of another. A fiduciary is a person who has the power and obligation to act for another under circumstances which require total trust, good faith, and honesty. Examples of fiduciaries are an Attorney, CPA, CEO, CFO, Registered Investment Advisor (RIA), Trustee, etc. The confusion comes when the terms to describe different types of advisors sound so similar that it is hard to navigate who is honestly acting in your best interest – an actual fiduciary.
Fee-Based vs. Fee Only
A Fee-Based advisor is another term for broker; Fee Only advisors are not compensated by a fee other than that paid by you. To take this one step further, a Fee Only NAPFA registered RIA means they are a member of the National Association of Personal Financial Advisors. NAPFA is the country’s leading professional association of Fee-Only financial advisors-highly trained professionals who are committed to working in the best interests of those they serve. To check if your current advisor or potential advisor is a NAPFA member click here.
Although all the above is extremely important, there is always the fact that there needs to be a trust felt between you and your advisor(s). The organic chemistry that comes from having a genuine connection with the person across the table from you is a factor that can be extremely important. As long as you are armed with the knowledge of the above and feel that you are being listened to by your advisor, your search should be a success!