Fiduciary financial advisor in Madison, WI. For those in Madison, WI who don't have the time, knowledge, or interest to oversee their assets and retirement accounts themselves, working with a financial advisor is a great way to help meet their financial goals. Trust is crucial in that partnership, and whether you're preparing for retirement, seeking to increase your wealth, or ensuring a secure financial future for your family, the knowledge, skill, and integrity of your financial advisor are of utmost importance. By working with a fiduciary financial advisor in Madison, WI, you'll have a confidante who has a legal and ethical responsibility to put your own best interests first.
At Correct Capital Wealth Management, our Madison, WI fiduciary financial advisors will never suggest a product, investment, or plan that we do not truly believe in ourselves. For financial advisors that uphold the fiduciary standard and operate with your best interest in mind, reach out to Correct Capital today at 314-930-401(k), contact us online, or schedule a meeting with a member of our advisor team.
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Correct Capital Wealth Management's office is physically located in St. Louis, MO, but we serve clients throughout the United States in both personal financial planning and corporate retirement plans.
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What Is a Fiduciary?
A fiduciary is a individual or organization that occupies a role of trust and responsibility when overseeing assets, finances, or legal affairs for someone else. Fiduciaries are legally and ethically obliged to act in the best interests of the person or organization they are serving, often known as their "principal" or "beneficiary". This duty of loyalty and duty of care is called the fiduciary standard.
Frequent examples of fiduciaries include:
- Trustees — People or organizations charged with managing and overseeing assets held in a trust for the benefit of beneficiaries.
- Executors — Individuals chosen to manage the estate and assets of a decedent based on their will or the law.
- Financial advisors — Professionals who provide financial advice and oversee investments for clients, with an duty to prioritize the client's financial well-being.
- Corporate directors — Representatives of a company's board of directors who are bound to shareholders to try and increase their profit.
- Guardians — Individuals chosen by the court to make decisions on behalf of minors or persons who are incapable to make decisions for themselves.
- Attorneys — Legal professionals who are bound by a fiduciary duty to operate in the best interests of their clients when dealing with legal matters.
- Real estate agents — Experts who help clients in buying, selling, or renting properties and are expected 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 elements to understanding fiduciary duty:
1. Good Faith
Fiduciaries have an obligation to act in "good faith," which means they interact with their clients or beneficiaries truthfully, with sincerity, and without any aim to mislead or infringe upon the interests of their beneficiaries. They must always act with integrity and with the best interests of the clients as a priority.
2. Duty of Loyalty
Fiduciaries owe a "duty of loyalty" to the client, which means they must put first the beneficiary's interests above their own. They should eschew any conflicts of interest that might compromise their capability to act solely in the client's best interests. Any conflicts of interest must 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 employ the level of care, skill, and diligence that a judicious person would use in the same or similar situations. They must make informed and thoughtful decisions when handling assets or deciding on behalf of their client or beneficiary. This duty guarantees that they work diligently to shield and increase the assets within their care while reducing risks.
What Is a Fiduciary Financial Advisor in Madison, WI?
Financial advisors help Madison, WI individuals, families, and business owners realize their life goals by means of a range of financial services and suggestions. These services consist of investment strategies, retirement consulting, tax planning, estate planning, asset management and more.
Any person in Madison, WI can give themselves the title of "financial advisor," but to say that they're 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 must possess qualifications and certifications from industry organizations such as the CFP Board and Fi360. Securing and maintaining these certifications require ongoing education and a stringent moral standard.
For instance, fiduciary financial advisors with a CERTIFIED FINANCIAL PLANNER™ certification need to 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 Madison, WI Fiduciaries?
Not all financial advisor in Madison, WI is fiduciaries. The key reason is that financial advisors can work under diverse regulatory frameworks and compensation structures, resulting to varying standards of care:
- Regulatory framework — Financial advisors can be subject to different regulatory frameworks relying on their business model. For instance, Registered Investment Advisors (RIAs) are typically fiduciaries. In contrast, some advisors (for example, those under a broker-dealer model) function under the suitability standard, which mandates investments 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 typically charge a percentage fee for their services, making their compensation clear and minimizing conflicts of interest. Other advisors generally receive commissions or different kinds 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 can't predict the future or determine which investments will be profitable with 100% certainty, but stipulates that a fiduciary financial advisor select investments that a prudent person would purchase considering an acceptable risk based on the client's goals and investment objective.
The prudent person rule originates in common law, and was eventually unified with the Uniform Prudent Investor Act. Each state might apply their own unique laws. Missouri law, for example, stipulates that fiduciary financial advisors must consider:
- Overall economic conditions
- Possible inflation or deflation
- Expected tax consequences of investments
- The role that each investment or course of action plays within your portfolio
- Expected return and appreciation of capital
- Additional assets and resources you have
- Your needs for liquidity, income, and preservation of capital
- An asset's special 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 objectives, while financial advisors with a fiduciary duty must act in your best interest. Here are some key differences:
Fiduciary Duty
- Ethical Responsibility: Fiduciary financial advisors are legally and ethically bound to operate in their clients' best interests at all times.
- Best Interest: Financial advisors must focus on the client's financial health over their own profit.
- Comprehensive Care: They must disclose all conflicts of interest, ensure transparency, and deliver the highest standard of care in their recommendations and actions.
- Governance: Regulated 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
- Suitability: Advisors merely 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 take into account their own interests as long as the recommendations are suitable.
- Possible Conflicts: Advisors may receive commissions from the sale of investment products, which can create conflicts of interest.
- Governance: Governed by the Financial Industry Regulatory Authority (FINRA), which requires a “reasonable basis” that an investment is suitable for the client.
- Instances: Some broker-dealers and insurance agents.
Best Interest vs. Reasonable Basis
The Investment Advisers Act of 1940 stipulates that fiduciary advisors must operate in their clients' "best interest," while FINRA Rule 2111 requires that dealer-brokers and other non-fiduciaries only have a "reasonable basis" for their recommendations. Here's a summary of what those terms mean in relation to handling a client's investments and financial planning:
| Best Interest | Reasonable Belief | |
|---|---|---|
| Definition | Demands financial advisors to act in the client's best financial interest. | Mandates advisors to recommend appropriate products or plans based on provided information. |
| Standard of Care | Elevated level of care ensuring every action aligns with the client's best outcome. | Makes certain recommendations are appropriate and make sense for the client's situation. |
| Client-Centric Approach | Advisors prioritize client's goals, needs, and preferences above their own. | Advisors base suggestions on the client's disclosed financial situation, objectives, and risk tolerance. |
| Transparency | Total disclosure of potential conflicts of interest is mandated. | More relaxed disclosure requirements, so long as the suggestion is proper. |
| Due Diligence | Suggestions based on a comprehensive evaluation of the client's financial situation. | Suggestions based on reasonable research and analysis. |
| Ongoing Duty | Ongoing duty to act in the client's best interest, requiring regular reviews and updates. | Emphasizes the suitability of advice at the time of the recommendation, with less focus on ongoing oversight. |
| Conflict of Interest | Must disclose and handle conflicts openly, ensuring clients are aware of potential biases. | Conflicts are less strictly regulated, as long as the recommendation remains appropriate. |
| Long-Term Commitment | Financial advisors have a ongoing obligation to monitor and update the client's financial plan. | Regular reviews are suggested, but the focus is on the suitability of initial suggestions. |
Benefits of Working with a Fiduciary Financial Advisor in Madison, WI
Choosing to partner with a fiduciary financial advisor in Madison, WI offers an array of benefits that can profoundly influence your financial health:
- Fiduciary financial advisers are obligated to act in your best interest and maintain professional standards
- Full disclosure of pertinent materials and facts and complete transparency with issues like risks, fees, and potential conflicts of interest, enabling you to make the optimal decisions for you and your Madison, WI family
- Make investments on your behalf by leveraging their expertise to develop and handle a diversified portfolio that resonates with your goals and strategies
- Thorough financial planning and a holistic approach to your financial well-being, considering all facets of your financial life to establish a personalized approach
- Consistent monitoring and direction to ensure your financial tactics and investments stay aligned and that you can adjust to any curveballs the market or life throws your way
- Minimized risk with prudent and judicious investment choices taken by thoroughly assessing the risk tied to each investment and shaping your portfolio to align with your risk tolerance
- Peace of mind that your best interests are being looked after by skilled financial advisors
- A lasting relationship with a fiduciary financial advisor that understands your financial goals evolve over time, and life conditions change
What Financial Planning Services Do Fiduciary Advisors Offer?
At Correct Capital Wealth Management, our holistic financial planning services are crafted to provide you with a holistic approach to achieving your financial goals. Our team of fiduciary financial advisors in St. Louis works diligently to understand your unique financial situation and customize strategies that suit your life aspirations.
Customized Financial Roadmap
We begin by conducting a thorough analysis of your current financial status, including income, expenses, assets, and liabilities. This helps us develop a personalized financial roadmap that meets your short-term needs and long-term objectives.
Investment Portfolio Management
We develop personalized strategies to balance your portfolio, balancing your risk tolerance with your time horizon. Our team consistently monitors and adjusts your investments to match your financial goals, ensuring that your portfolio remains robust and adaptable to changing market conditions.
Retirement Strategy
Planning for retirement is a cornerstone of our comprehensive financial planning. We guide you through the complexities of retirement accounts, social security benefits, and income strategies to guarantee you can retire with ease and securely.
Tax Planning
Effective tax planning ensures more of your hard-earned money in your pocket and your family. Our advisors are well-versed in tax laws and strategies that can decrease your tax liability and boost your overall financial health.
Legacy Planning
We also deliver expert guidance on estate planning to assist you in preserving your legacy. From wills and trusts to estate tax strategies, we ensure your assets are distributed according to your wishes while reducing tax burdens.
Continuous Oversight
Financial planning is not a single event but a constant process. We deliver ongoing monitoring and periodic reviews to adapt 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 take pride in building long-lasting relationships based on trust, transparency, and personalized service. Your financial well-being is our primary priority, and we are dedicated to helping you achieve your financial goals with integrity and excellence.
Other services we offer in Madison, WI include:
- 401(k) Audit
- High-Net-Worth Wealth Management
- Retirement Planner
- Financial Planning
- Retirement Plan Consultants
- Self-Employed Retirement Plans
Hire Correct Capital as Your Madison, WI Fiduciary Financial Advisor
Selecting a financial advisor in Madison, WI with a fiduciary duty is essential to ensure your long-term interests stay protected. At Correct Capital Wealth Management, we are honored to be fiduciary financial advisors who prioritize the financial success and peace of mind of Madison, WI residents and business owners alike. Our team is comprised of CERTIFIED FINANCIAL PLANNER™ (CFP®) professionals and we are a Registered Investment Advisor (RIA) with the knowledge and qualifications essential to assist 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.
Contact 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 reach your financial goals in Madison, WI.
