Fiduciary financial advisor in Baltimore, MD. For Baltimore, MD residents who lack the time, knowledge, or inclination to manage their assets and retirement accounts on their own, partnering with a financial advisor offers peace of mind. That relationship is built on trust, and whether you're planning for retirement, seeking to manage your wealth, or ensuring a secure financial future for your loved ones, you need a financial advisor who you know will be an honest steward of your assets. By choosing a fiduciary financial advisor in Baltimore, MD, you'll have a confidante who has a legal and ethical obligation to put your own best interests first.
At Correct Capital Wealth Management, our Baltimore, MD fiduciary financial advisors will never recommend a product, investment, or plan that we do not sincerely trust in ourselves. For financial advisors that adhere to the fiduciary standard and work with your best interest at heart, get in touch with Correct Capital today at 314-930-401(k), fill out our online form, or schedule a meeting with on of our advisors.
Understanding Fiduciaries
A fiduciary is a individual or entity that occupies a position of confidence and duty when managing assets, monetary matters, or legal affairs on behalf of another. Fiduciaries are legally and ethically obliged to act in the best interests of the individual or organization they are representing, often referred to as their "principal" or "beneficiary". This duty of loyalty and duty of care is known as the fiduciary standard.
Typical examples of fiduciaries are:
- Trustees — Individuals or entities tasked with handling and overseeing assets held in a trust for the benefit of beneficiaries.
- Executors — Individuals designated to manage the estate and assets of a deceased person as per their will or the law.
- Financial advisors — Professionals who give financial advice and oversee investments for clients, with an duty to put first the client's financial goals.
- Corporate directors — Members of a company's board of directors who are given the responsibility of making decisions in the best interests of the shareholders.
- Guardians — Individuals appointed by the court to make decisions on behalf of people under 18 or people who are incapable to make decisions for themselves.
- Attorneys — Legal professionals who are obligated by a fiduciary duty to operate in the best interests of their clients when managing legal matters.
- Real estate agents — Experts who help clients in buying, selling, or renting properties and are required to act in the best interests of their clients in real estate transactions.
Good Faith, Duty of Loyalty, and Duty of Care
There are three vital aspects to understanding fiduciary duty:
1. Good Faith
Fiduciaries have an obligation to act in "good faith," which means they engage with their clients or beneficiaries honestly, with genuine intention, and without any intention to mislead or harm the interests of their beneficiaries. They must continually act honestly and with the best interests of the clients at the forefront.
2. Duty of Loyalty
Fiduciaries owe a "duty of loyalty" to the client, which means they must put first the beneficiary's interests ahead of their own. They should eschew any conflicts of interest that could jeopardize their capability to act solely in the beneficiary's best interests. Any conflicts of interest need to be disclosed to the client and the advisor needs to still act with the beneficiary's interest over their own.
3. Duty of Care
Fiduciaries have a "duty of care" to apply the standard of care, skill, and diligence that a judicious person would apply in the same or similar situations. They must make well-informed and thoughtful decisions when managing assets or deciding on behalf of their client or beneficiary. This duty confirms that they work diligently to shield and increase the assets within their care while minimizing risks.
What Is a Fiduciary Financial Advisor in Baltimore, MD?
Financial advisors help Baltimore, MD individuals, families, and business owners realize their life goals through a range of financial services and recommendations. These services comprise investment recommendations, retirement consulting, tax planning, estate planning, portfolio management and others.
Any person in Baltimore, MD can call themselves a "financial advisor," but to be a fiduciary, an advisor must be registered with the SEC, and is legally required to abide by fiduciary duty, and as a result, must put clients’ interests ahead of their own. They have to have credentials and certifications from industry organizations such as the CFP Board and Fi360. Achieving and maintaining these certifications require ongoing education and a stringent moral standard.
To illustrate, fiduciary financial advisors with a CERTIFIED FINANCIAL PLANNER™ certification must adhere to the CFP Board's Code of Ethics and Standards of Conduct to:
- Act with honesty, integrity, competence, and diligence
- Act in the client’s best interests
- Exercise due care
- Avoid or disclose and manage conflicts of interest
- Maintain the confidentiality and protect the privacy of client information
- Act in a manner that reflects positively on the financial planning profession and CFP® certification
Are All Financial Advisors in Baltimore, MD Fiduciaries?
Not all financial advisor in Baltimore, MD is fiduciaries. The main reason is that financial advisors can operate under different regulatory frameworks and compensation structures, leading to varying standards of care:
- Regulatory framework — Financial advisors might be subject to different regulatory oversight relying on their business model. For instance, Registered Investment Advisors (RIAs) are generally fiduciaries. Conversely, some advisors (for example, those within a broker-dealer model) operate under the suitability standard, which requires advice to be fitting for clients but does not mandate the same level of fiduciary duty.
- Compensation structure — The method financial advisors are compensated may impact their fiduciary status. Fiduciary advisors often charge a percentage fee for their services, rendering their compensation transparent and reducing conflicts of interest. Non-fiduciary advisors generally receive commissions or other forms of compensation tied to product sales, which means you can't be sure that their recommendations are 100% for your benefit.
The Prudent-Person Rule
Fiduciary financial advisors must abide by the Prudent-Person Rule, commonly known as the prudent investor rule. The rule acknowledges that financial advisors cannot predict the future or determine which investments will be profitable ahead of time, but mandates that a fiduciary financial advisor purchase investments that a prudent person would purchase based on an acceptable risk in light of the client's goals and investment objective.
The prudent person rule has its origins in in common law, and was subsequently unified with the Uniform Prudent Investor Act. Each state may apply their own unique laws. Missouri law, for example, sets out that fiduciary financial advisors must consider:
- General economic conditions
- Potential inflation or deflation
- Expected tax implications of investments
- The role that each investment or approach plays within your portfolio
- Expected return and appreciation of capital
- Additional assets and resources you possess
- Your needs for liquidity, income, and preservation of capital
- An asset's unique relationship or value to you, if any
- The size and nature of your portfolio, its distribution requirements, and the expected duration of your relationship with the fiduciary financial advisor
Fiduciary Duty vs. Suitability Standard: What’s the Difference?
Advisors who work under the “suitability rule” are merely required to suggest investments or financial products that match your goals, while financial advisors with a fiduciary duty must act in your best interest. Here are some key differences:
Fiduciary Duty
- Legal and Ethical Responsibility: Fiduciary financial advisors are legally and ethically obligated to operate in their clients' best interests at all times.
- Client's Best Interest: Advisors must prioritize the client's financial well-being over their own profit.
- Comprehensive Care: They must disclose all conflicts of interest, ensure transparency, and provide the highest standard of care in their advice and actions.
- Governance: Governed by the Investment Advisers Act of 1940, which requires that investment advisors have a fiduciary duty to their clients.
- ExamplesInstances: Registered Investment Advisors (RIAs) and CERTIFIED FINANCIAL PLANNER™ professionals.
Suitability Standard
- Appropriateness: Advisors only need to ensure that their recommendations are suitable for the client’s financial requirements and objectives at the time of the transaction.
- Lower Standard of Care: Advisors can consider their own interests as long as the suggestions are appropriate.
- Potential Conflicts: Advisors may earn commissions from the sale of investment products, which can create conflicts of interest.
- Regulation: Governed by the Financial Industry Regulatory Authority (FINRA), which requires a “reasonable basis” that an investment is appropriate for the client.
- Instances: Some broker-dealers and insurance agents.
Best Interest vs. Reasonable Basis
The Investment Advisers Act of 1940 mandates that fiduciary advisors must act in their clients' "best interest," while FINRA Rule 2111 requires that dealer-brokers and other non-fiduciaries simply have a "reasonable basis" for their suggestions. Here's a breakdown of what those terms mean in relation to dealing with a client's investments and financial planning:
| Best Interest | Reasonable Belief | |
|---|---|---|
| Definition | Demands financial advisors to act in the client's most favorable financial interest. | Requires advisors to suggest appropriate products or plans based on provided information. |
| Standard of Care | Higher level of care ensuring every action matches with the client's most favorable outcome. | Ensures suggestions are suitable and make sense for the client's situation. |
| Client-Centric Approach | Financial advisors focus on client's goals, needs, and preferences above their own. | Financial advisors base recommendations on the client's disclosed financial situation, objectives, and risk tolerance. |
| Transparency | Complete disclosure of potential conflicts of interest is necessary. | Looser disclosure requirements, so long as the recommendation is appropriate. |
| Due Diligence | Suggestions based on a comprehensive evaluation of the client's financial situation. | Recommendations based on reasonable research and analysis. |
| Ongoing Duty | Unceasing duty to act in the client's best interest, necessitating regular reviews and updates. | Stresses the suitability of advice at the time of the recommendation, with less focus on ongoing oversight. |
| Conflict of Interest | Must reveal and manage conflicts openly, ensuring clients are aware of potential biases. | Conflicts are less tightly controlled, as long as the recommendation remains suitable. |
| Long-Term Commitment | Financial advisors have a continuous obligation to oversee and update the client's financial plan. | Periodic reviews are recommended, but the focus is on the suitability of initial suggestions. |
Benefits of Working with a Fiduciary Financial Advisor in Baltimore, MD
Opting to collaborate with a fiduciary financial advisor in Baltimore, MD brings to the table an array of benefits that can profoundly affect your fiscal health:
- Fiduciary financial advisers must act in your best interest and maintain ethical standards
- Full disclosure of essential materials and facts and complete transparency concerning issues like risks, fees, and potential conflicts of interest, enabling you to make the most informed decisions for you and your Baltimore, MD family
- Manage investments on your behalf by employing their expertise to develop and oversee a diversified portfolio that aligns with your financial goals and risk tolerance
- Complete financial planning and a well-rounded approach to your financial well-being, evaluating all facets of your financial life to create a custom approach
- Ongoing monitoring and direction to guarantee your financial strategies and investments stay aligned and that you can modify to any surprises the market or life presents your way
- Minimized risk with wise and judicious investment choices done by meticulously assessing the risk associated with each investment and shaping your portfolio to match your risk tolerance
- Assurance that your best interests are being looked after by skilled financial professionals
- A prolonged relationship with a fiduciary financial advisor that grasps your financial goals change over time, and life situations change
What Financial Planning Services Do Fiduciary Advisors Offer?
At Correct Capital Wealth Management, our comprehensive financial planning services are created to provide you with a holistic approach to meeting your financial goals. Our team of fiduciary financial advisors in St. Louis functions diligently to comprehend your unique financial situation and tailor strategies that match your life aspirations.
Tailored Financial Roadmap
We begin by conducting a comprehensive analysis of your present financial status, including income, expenses, assets, and liabilities. This helps us create a personalized financial roadmap that caters to your short-term needs and long-term objectives.
Investment Portfolio Management
We develop personalized strategies to balance your portfolio, making sure your risk tolerance aligns with your time horizon. Our team continuously monitors and adjusts your investments to align with your financial goals, ensuring that your portfolio remains robust and adaptable as market conditions change.
Retirement Planning
Planning for retirement is a foundation of our comprehensive financial planning. We help you navigate the complexities of retirement accounts, social security benefits, and income strategies to guarantee you can retire comfortably and with confidence.
Tax Planning
Effective tax planning ensures more of your hard-earned money with yourself and your loved ones. Our advisors are well-versed in tax laws and strategies that can reduce your tax liability and improve your overall financial health.
Estate Planning
We also provide educated guidance on estate planning to help you protecting your legacy. From wills and trusts to estate tax strategies, we guarantee your assets are passed on according to your wishes while lowering tax burdens.
Ongoing Monitoring and Adjustments
Financial planning is not a once-off event but a constant process. We offer ongoing monitoring and regular reviews to adjust your financial plan to any alterations in your life circumstances or economic environment.
Client-Focused Strategy
At Correct Capital, our approach is highly client-centric. We pride ourselves on building enduring relationships based on trust, transparency, and personalized service. Your financial well-being is our top priority, and we are devoted to helping you attain your financial goals with integrity and excellence.
Other services we offer in Baltimore, MD include:
- 401(k) Audit
- High-Net-Worth Wealth Management
- Retirement Planner
- Financial Planning
- Retirement Plan Consultants
Choose Correct Capital as Your Baltimore, MD Fiduciary Financial Advisor
Choosing a financial advisor in Baltimore, MD with a fiduciary duty is crucial to guarantee your money is being put to use how you need it to be. At Correct Capital Wealth Management, we are pleased to be fiduciary financial advisors who place at the forefront the financial success and peace of mind of Baltimore, MD residents and business owners alike. Our team includes CERTIFIED FINANCIAL PLANNER™ (CFP®) professionals and we are a Registered Investment Advisor (RIA) with the expertise and qualifications needed to guide you on your financial journey. We provide all our clients our I.O.U promise: all of our advice will be independent, objective, and unbiased.
Get in touch with us today at 314-930-401(k) or contact us through our website to arrange an appointment and learn more about how we can help you achieve your financial goals in Baltimore, MD.
