Fiduciary financial advisor in Phoenix, AZ. For those in Phoenix, AZ who don't have the time, expertise, or interest to manage their assets and retirement accounts on their own, working with a financial advisor provides peace of mind. That relationship is built on trust, and whether you're preparing for retirement, looking to increase your wealth, or ensuring a stable financial future for your loved ones, you need a financial advisor who you know will be an honest steward of your assets. By working with a fiduciary financial advisor in Phoenix, AZ, you'll have a ally who has a legal and ethical responsibility to put your own best interests first.
At Correct Capital Wealth Management, our Phoenix, AZ fiduciary financial advisors will never propose a product, investment, or strategy that we don't genuinely have faith in ourselves. For financial advisors that follow the fiduciary standard and work with your best interest at heart, call Correct Capital today at 314-930-401(k), contact us through our wesbite, or schedule an appointment with a member of our advisor team.
About Fiduciaries
A fiduciary is a person or organization that maintains a position of trust and responsibility when managing assets, monetary matters, or legal affairs on behalf of another person. Fiduciaries are legally and ethically bound to operate in the best interests of the individual or organization they are representing, often known as their "principal" or "beneficiary". This duty of loyalty and duty of care is called the fiduciary standard.
Common examples of fiduciaries are:
- Trustees — Individuals or entities charged with managing and overseeing assets held in a trust for the advantage of beneficiaries.
- Executors — Individuals designated to manage the estate and assets of a decedent based on their will or the law.
- Financial advisors — Professionals who give financial advice and oversee investments for clients, with an obligation to emphasize the client's financial well-being.
- Corporate directors — Representatives of a company's board of directors who are given the responsibility of making decisions in the best interests of the shareholders.
- Guardians — Individuals designated by the court to make decisions on behalf of people under 18 or individuals who are incapable to make decisions for themselves.
- Attorneys — Lawyers who are committed by a fiduciary duty to work in the best interests of their clients when managing their legal affairs.
- Real estate agents — Professionals who aid 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 important aspects to understanding fiduciary duty:
1. Good Faith
Fiduciaries have an obligation to act in "good faith," which means they deal with their clients or beneficiaries truthfully, with sincerity, and without any design to mislead or infringe upon the interests of their beneficiaries. They must always act honestly and with the best interests of the clients as a priority.
2. Duty of Loyalty
Fiduciaries owe a "duty of loyalty" to the beneficiary, which means they must put first the beneficiary's interests over their own. They should steer clear of any conflicts of interest that might impair their capacity to act exclusively in the beneficiary's best interests. Any conflicts of interest need to be disclosed to the client or beneficiary and the advisor must still act with the client/beneficiary's interest over their own.
3. Duty of Care
Fiduciaries have a "duty of care" to apply the level of care, skill, and diligence that a judicious person would use in like circumstances. They must make well-informed and thoughtful decisions when overseeing assets or making decisions on behalf of their client or beneficiary. This duty ensures that they do their best to protect and expand the assets within their care while mitigating risks.
What Is a Fiduciary Financial Advisor in Phoenix, AZ?
Financial advisors help Phoenix, AZ individuals, families, and business owners realize their life goals as they relate to their finances. These services include investment recommendations, retirement consulting, tax planning, estate planning, portfolio management and others.
Any individual in Phoenix, AZ 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 need to have credentials and certifications from industry organizations such as the CFP Board and Fi360. Securing and keeping these certifications require continuous education and a strict moral standard.
To illustrate, fiduciary financial advisors with a CERTIFIED FINANCIAL PLANNER™ certification are required 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 Phoenix, AZ Fiduciaries?
Not all financial advisor in Phoenix, AZ are fiduciaries. The main reason is that financial advisors can function under different regulatory frameworks and compensation structures, leading to divergent standards of care:
- Regulatory framework — Financial advisors can be subject to different regulatory frameworks based on their business model. As an example, Registered Investment Advisors (RIAs) are generally fiduciaries. Conversely, some advisors (for example, those under a broker-dealer model) work under the suitability standard, which requires strategies to be appropriate for clients but does not mandate the same duties of loyalty and care.
- Compensation structure — The manner financial advisors are compensated can influence their fiduciary status. Fiduciary advisors typically charge a percentage fee for their services, rendering their compensation open and minimizing conflicts of interest. Non-fiduciary advisors typically receive commissions or different kinds of compensation associated with product sales, which means they could make recommendations that are more in their interest than yours.
The Prudent-Person Rule
Fiduciary financial advisors are required to abide by the Prudent-Person Rule, often known as the prudent investor rule. The rule acknowledges that financial advisors can't predict the future or know which investments will be profitable with 100% certainty, but stipulates that a fiduciary financial advisor purchase investments that a sensible person would purchase based on an acceptable risk considering the client's goals and investment objective.
The prudent person rule has its origins in in common law, and was eventually unified with the Uniform Prudent Investor Act. Each state may apply their own particular laws. Missouri law, for example, mandates that fiduciary financial advisors must consider:
- General economic conditions
- Potential inflation or deflation
- Expected tax implications of investments
- The part that each investment or approach plays within your portfolio
- Expected return and appreciation of capital
- Additional assets and resources you own
- Your needs for liquidity, income, and preservation of capital
- An asset's distinctive relationship or value to you, if any
- The size and nature of your portfolio, its distribution requirements, and the estimated duration of your relationship with the fiduciary financial advisor
Fiduciary Duty vs. Suitability Standard: What’s the Difference?
Advisors who operate under the “suitability rule” are merely required to suggest investments or products that align with your goals, while advisors with a fiduciary duty must act in your best interest. Here are some important differences:
Fiduciary Duty
- Ethical Responsibility: Fiduciary financial advisors are lawfully and morally bound to operate in their clients' best interests at all times.
- Best Interest: Financial advisors must prioritize the client's financial well-being over their own profit.
- Full Disclosure: They must disclose all conflicts of interest, ensure transparency, and provide the highest level of care in their recommendations 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: Financial advisors can take into account their own interests as long as the recommendations are appropriate.
- Possible Conflicts: Advisors may earn commissions from the sale of investment products, which can create conflicts of interest.
- Regulation: Regulated by the Financial Industry Regulatory Authority (FINRA), which mandates 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 act 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 breakdown of what those terms mean in relation to dealing with a client's investments and financial planning:
| Best Interest | Reasonable Belief | |
|---|---|---|
| Definition | Mandates advisors to act in the client's most favorable financial interest. | Mandates advisors to recommend suitable products or strategies based on provided information. |
| Standard of Care | Superior level of care making sure every action matches with the client's optimal outcome. | Guarantees suggestions are proper and make sense for the client's situation. |
| Client-Centric Approach | Financial advisors focus on client's objectives, needs, and preferences above their own. | Advisors base recommendations on the client's disclosed financial situation, objectives, and risk tolerance. |
| Transparency | Complete disclosure of potential conflicts of interest is mandated. | Looser disclosure requirements, provided the recommendation is appropriate. |
| Due Diligence | Recommendations based on a comprehensive evaluation of the client's financial situation. | Recommendations based on adequate research and analysis. |
| Ongoing Duty | Ongoing duty to act in the client's best interest, demanding regular reviews and updates. | Stresses the appropriateness of advice at the time of the recommendation, with reduced focus on ongoing oversight. |
| Conflict of Interest | Must reveal and handle conflicts transparently, 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 continuous obligation to monitor and update the client's financial plan. | Regular reviews are advised, but the focus is on the suitability of initial recommendations. |
Benefits of Working with a Fiduciary Financial Advisor in Phoenix, AZ
Deciding to work with a fiduciary financial advisor in Phoenix, AZ brings to the table an array of benefits that can deeply affect your monetary health:
- Fiduciary financial advisers are required to act in your best interest and uphold high standards
- Complete disclosure of essential materials and facts and full transparency concerning matters like risks, fees, and potential conflicts of interest, allowing you to make the best decisions for you and your Phoenix, AZ family
- Manage investments on your behalf by employing their expertise to create and handle a diversified portfolio that matches your financial goals and risk tolerance
- Complete financial planning and a full approach to your financial well-being, considering all facets of your financial life to establish a personalized approach
- Continuous monitoring and advice to guarantee your financial tactics and investments continue to be in line and that you can adapt to any curveballs the market or life throws your way
- Reduced risk with prudent and responsible investment choices made by carefully assessing the risk associated with each investment and shaping your portfolio to match your risk tolerance
- Relief that your best interests are being watched over by knowledgeable financial professionals
- A long-term relationship with a fiduciary financial advisor that grasps your financial goals shift over time, and life scenarios change
What Financial Planning Services Do Fiduciary Advisors Offer?
At Correct Capital Wealth Management, our comprehensive 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 grasp your unique financial situation and tailor strategies that match your life aspirations.
Tailored Financial Roadmap
We begin by undertaking a thorough analysis of your current financial status, including income, expenses, assets, and liabilities. This helps us formulate a personalized financial roadmap that caters to your short-term needs and long-term objectives.
Financial Portfolio Management
We develop personalized strategies to balance your portfolio, balancing your risk tolerance with your time horizon. Our team regularly monitors and adjusts your investments to match your financial goals, making sure 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 guide you through the complexities of retirement accounts, social security benefits, and income strategies to guarantee you can retire securely and securely.
Tax Planning
Effective tax planning helps keep your hard-earned money out of Uncle Sam's hands. Our advisors are expert in tax laws and strategies that can lower your tax liability and boost your overall financial health.
Estate Planning
We also deliver educated guidance on estate planning to help you safeguarding your legacy. From wills and trusts to estate tax strategies, we make certain your assets are distributed according to your wishes while minimizing tax burdens.
Ongoing Monitoring and Adjustments
Financial planning is not a one-time event but a constant process. We provide ongoing monitoring and routine reviews to adapt your financial plan to any changes in your life circumstances or economic environment.
Client-Centric Approach
At Correct Capital, our approach is profoundly client-centric. We pride ourselves on building long-lasting relationships based on trust, transparency, and personalized service. Your financial well-being is our highest priority, and we are dedicated to helping you reach your financial goals with integrity and excellence.
Other services we offer in Phoenix, AZ include:
- 401(k) Audit
- High-Net-Worth Wealth Management
- Retirement Planner
- Financial Planning
- Retirement Plan Consultants
Choose Correct Capital as Your Phoenix, AZ Fiduciary Financial Advisor
Choosing a financial advisor in Phoenix, AZ with a fiduciary standard is crucial to ensure your money is being put to use how you need it to be. At Correct Capital Wealth Management, we are honored to be fiduciary financial advisors who place at the forefront the financial success and peace of mind of Phoenix, AZ individuals and business owners alike. Our team includes CERTIFIED FINANCIAL PLANNER™ (CFP®) professionals and we are a Registered Investment Advisor (RIA) with the skills and qualifications necessary to lead you on your financial journey. We offer 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 online to set up an appointment and discover how we can aid you reach your financial goals in Phoenix, AZ.
