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All About Fiduciaries in Philadelphia

The word fiduciary has its roots from Latin meaning “trust”. This word also is more common in the trust & trustee operations, where the trustee is a fiduciary to the beneficiaries of the trust and has to manage it with the best interests of those said beneficiaries. But more and more, this word is relevant in the investment advisory world and in Philadelphia, where the Fiduciary (again) means putting other people’s interests ahead of yours and providing advice that fully benefits those clients. 

In other words, providing Fiduciary Advice in Philadelphia means that you’d advice that client as if it was you, after all you’d want the best for yourself, no? But let’s also provide couple real world examples where the Fiduciary idea is easier to spot, or where we know and don’t expect a fiduciary relationship. 

Take car buying, for example. If you go to a Honda dealership to buy a car, what make of car do you expect to buy? Well, a Honda of course, right, as it is a Honda dealership. What if you ask the dealer or sales consultant helping you there what they think about Toyotas and if they’re better, what answer would you get? Well, you’d say, I wouldn’t even ask such a silly question as I don’t expect Toyotas at a Honda dealership (assume they only sell one type and not multi-car dealership). The point here is that at the car dealership we don’t expect them to be a fiduciary to us, they’ll just sell us a Honda and that’s it, if they can. They’re a fiduciary (best interest) to their employer to sell the most Hondas possible. 

Now, if you can bring a trusted mechanic with you and pay that person $500 flat to go car shopping and give unbiased advice regardless of any brand, that would be a Fiduciary Relationship, as that trusted car mechanic would give you his professional opinion on the best car for you, regardless of brands. The advice precedes the product/brand, and not vice versa. 

And that is exactly what a financial fiduciary is. Just like a trusted mechanic going car shopping with you, a Fiduciary Advisor in Philadelphia should provide the best financial advice for you (putting your interests first) and then “go out” to find the best financial product(s) to fit that advice. Advice is first before the financial product. But very often, many financial advisors, even though they may seem as if they're looking out for you, end up with their own brand of financial product (or one they get compensated from). They may not be necessarily bad, but you won’t know if that was the best financial product for you or the ones that paid the best commission to the financial advisor. 

And that’s why it is very important in choosing a Fiduciary Advisor in Philadelphia that focuses on best advice for you first, then solving it with an unbiased financial product later. Even if people are inherently good, having a financial interest in the product leads someone to overselling it, even if better products exist. Thus, a Fiduciary Advisor is typically transparent on fees and how they get compensated and typically have fewer conflicts of interests. While we all like free stuff, in the financial advice field, you’d want to directly pay your advisor and know and understand how your advisor is compensated, if not from you. Nothing is free, and if you think your advice is free or you simply don’t understand how your advisor is paid then you’re either overpaying or getting products that may not be in your best interest. 

If you're interested in learning more about financial advisors in Philadelphia, visit InvestEd's tips on fiduciary financial advisors in Philadelphia here.