Fiduciary financial advisor in Santa Clarita, CA. For Santa Clarita, CA residents who don't have the time, skill, or interest to oversee their investments and retirement accounts on their own, working with a financial advisor offers peace of mind. That relationship is built on trust, and whether you're planning for retirement, seeking to grow your wealth, or ensuring a stable financial future for your loved ones, the knowledge, skill, and integrity of your financial advisor matter greatly. By choosing a fiduciary financial advisor in Santa Clarita, CA, you'll gain a partner who is legally and ethically committed to put your own best interests first.
At Correct Capital Wealth Management, our Santa Clarita, CA fiduciary financial advisors will never suggest a product, investment, or plan that we don't truly trust in ourselves. For financial advisors that adhere to the fiduciary standard and act with your best interest as their top priority, reach out to Correct Capital today at 314-930-401(k), fill out our online form, or schedule a meeting with on of our advisors.
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Understanding Fiduciaries
A fiduciary is a individual or entity that holds a role of trust and duty when handling assets, monetary matters, or legal affairs for another person. Fiduciaries are legally and ethically committed to work in the best interests of the person or organization they are representing, often known as their "principal" or "beneficiary". This duty of loyalty and duty of care is referred to as the fiduciary standard.
Common examples of fiduciaries include:
- Trustees — Individuals or entities charged with handling and overseeing assets held in a trust for the advantage of beneficiaries.
- Executors — People appointed 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 obligation 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 — People appointed by the court to make decisions on behalf of minors or persons who are unable to make decisions for themselves.
- Attorneys — Legal professionals who are obligated by a fiduciary duty to act in the best interests of their clients when dealing with their cases.
- Real estate agents — Professionals who assist clients in purchasing, 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 crucial facets to understanding fiduciary duty:
1. Good Faith
Fiduciaries are mandated to act in "good faith," which means they deal with their clients or beneficiaries with integrity, with genuine intention, and without any intention to deceive 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 client, which means they must prioritize the beneficiary's interests ahead of their own. They should avoid any conflicts of interest that might jeopardize their capacity to act exclusively in the client's best interests. Every conflicts of interest must be disclosed to the client and the advisor must still act with the client/beneficiary's interest above their own.
3. Duty of Care
Fiduciaries have a "duty of care" to employ the degree of care, skill, and diligence that a judicious person would apply in the same or similar situations. They must make informed and considered decisions when overseeing assets or deciding on behalf of their client or beneficiary. This duty guarantees that they work diligently to protect and increase the assets within their care while reducing risks.
What Is a Fiduciary Financial Advisor in Santa Clarita, CA?
Financial advisors help Santa Clarita, CA individuals, families, and business owners attain their life goals through a variety of financial services and recommendations. These services include investment recommendations, retirement planning, tax planning, estate planning, asset management and others.
Any individual in Santa Clarita, CA can give themselves the title of "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 qualifications and certifications from industry organizations such as the CFP Board and Fi360. Obtaining and keeping these certifications necessitate continuous education and a rigorous moral standard.
To illustrate, fiduciary financial advisors with a CERTIFIED FINANCIAL PLANNER™ certification are required to comply with 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 Santa Clarita, CA Fiduciaries?
Not all financial advisor in Santa Clarita, CA is fiduciaries. The main reason lies in the fact that financial advisors can operate under diverse regulatory frameworks and compensation structures, leading to differentiated standards of care:
- Regulatory framework — Financial advisors can be subject to different regulatory oversight relying on their business model. For instance, Registered Investment Advisors (RIAs) are typically fiduciaries. On the other hand, some advisors (for example, those within a broker-dealer model) work under the suitability standard, which mandates strategies to be suitable for clients but doesn't require the same duties of loyalty and care.
- Compensation structure — The method financial advisors are compensated can influence their fiduciary status. Fiduciary advisors usually charge a proportional charge for their services, rendering their compensation open and limiting conflicts of interest. Other advisors typically receive commissions or other forms of compensation linked 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 are required to abide by the Prudent-Person Rule, also known as the prudent investor rule. The rule acknowledges that financial advisors can't predict the future or know which investments will be profitable ahead of time, but stipulates that a fiduciary financial advisor go for investments that a reasonable person would purchase based on an acceptable risk in light of 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 can 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 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 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 anticipated duration of your relationship with the fiduciary financial advisor
Fiduciary Duty vs. Suitability Standard: What’s the Difference?
Advisors who operate under the “suitability standard” are merely required to suggest investments or products that align with your goals, while financial advisors with a fiduciary duty must operate in your best interest. Here are some important 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: Financial advisors must focus on the client's financial well-being over their own profit.
- Full Disclosure: They must reveal all conflicts of interest, ensure transparency, and deliver the highest standard 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: Financial 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: Financial advisors can take into account their own interests as long as the suggestions are suitable.
- Possible Conflicts: Advisors may receive commissions from the sale of investment products, which can create conflicts of interest.
- Regulation: Regulated by the Financial Industry Regulatory Authority (FINRA), which requires a “reasonable basis” that an investment is appropriate for the client.
- Examples: 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 stipulates that dealer-brokers and other non-fiduciaries simply have a "reasonable basis" for their recommendations. Here's a summary of what those terms mean in relation to dealing with a client's investments and financial planning:
| Best Interest | Reasonable Belief | |
|---|---|---|
| Definition | Demands advisors to act in the client's most favorable financial interest. | Mandates advisors to recommend suitable investment products or plans based on provided information. |
| Standard of Care | Superior level of care making sure every action matches with the client's optimal outcome. | Makes certain recommendations are appropriate and make sense for the client's situation. |
| Client-Centric Approach | Advisors focus on client's objectives, needs, and preferences above their own. | Advisors base suggestions on the client's stated financial situation, objectives, and risk tolerance. |
| Transparency | Complete disclosure of potential conflicts of interest is mandated. | Looser disclosure requirements, so long as the suggestion is suitable. |
| Due Diligence | Recommendations based on a comprehensive evaluation of the client's financial situation. | Recommendations based on adequate research and analysis. |
| Ongoing Duty | Continuous 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 less focus on ongoing oversight. |
| Conflict of Interest | Must reveal and handle conflicts transparently, ensuring clients are aware of potential biases. | Conflicts are more loosely governed, as long as the recommendation remains appropriate. |
| Long-Term Commitment | Advisors have a continuous obligation to oversee and update the client's financial plan. | Periodic reviews are advised, but the focus is on the suitability of initial suggestions. |
Benefits of Working with a Fiduciary Financial Advisor in Santa Clarita, CA
Deciding to work with a fiduciary financial advisor in Santa Clarita, CA offers an array of benefits that can profoundly affect your financial health:
- Fiduciary financial advisers are required to act in your best interest and uphold high standards
- Full disclosure of relevant materials and facts and full transparency with issues like risks, fees, and potential conflicts of interest, permitting you to make the most informed decisions for you and your Santa Clarita, CA family
- Make investments on your behalf by employing their expertise to craft and manage a diversified portfolio that resonates with your financial goals and risk tolerance
- Complete financial planning and a holistic approach to your financial well-being, evaluating all facets of your financial life to devise a custom approach
- Ongoing monitoring and direction to guarantee your financial strategies and investments continue to be in line and that you can modify to any surprises the market or life presents your way
- Reduced risk with wise and responsible investment choices done by thoroughly assessing the risk linked with each investment and modifying your portfolio to correspond with your risk tolerance
- Assurance that your best interests are being watched over by experienced financial advisors
- A prolonged relationship with a fiduciary financial advisor that grasps your financial goals shift 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 offer you with a holistic approach to reaching your financial goals. Our team of fiduciary financial advisors in St. Louis operates diligently to understand your unique financial situation and adapt strategies that match your life aspirations.
Customized Financial Roadmap
We begin by undertaking a comprehensive analysis of your present financial status, including income, expenses, assets, and liabilities. This helps us develop a personalized financial roadmap that caters to your short-term needs and long-term objectives.
Investment Portfolio Management
We create personalized strategies to diversify 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, making sure that your portfolio remains robust and adaptable as market conditions change.
Retirement Strategy
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 make certain you can retire with ease and securely.
Tax Planning
Effective tax planning helps keep your hard-earned money in your pocket and your family. Our advisors are well-versed in tax laws and strategies that can lower your tax liability and improve your overall financial health.
Estate Planning
We also offer informed guidance on estate planning to assist you in preserving your legacy. From wills and trusts to estate tax strategies, we make certain your assets are passed on according to your wishes while lowering tax burdens.
Ongoing Monitoring and Adjustments
Financial planning is not a one-time event but a ongoing process. We offer ongoing monitoring and regular reviews to modify your financial plan to any alterations in your life circumstances or economic environment.
Client-Centric Approach
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 highest priority, and we are dedicated to helping you reach your financial goals with integrity and excellence.
Other services we offer in Santa Clarita, CA include:
- Investment Management
- 401(k) Audit
- High-Net-Worth Wealth Management
- Retirement Planner
- Financial Planning
- Retirement Plan Consultants
Choose Correct Capital as Your Santa Clarita, CA Fiduciary Financial Advisor
Choosing a financial advisor in Santa Clarita, CA with a fiduciary standard is crucial to ensure your long-term interests remain protected. At Correct Capital Wealth Management, we are pleased to be fiduciary financial advisors who prioritize the financial success and peace of mind of Santa Clarita, CA 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 assist 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.
Get in touch with us today at 314-930-401(k) or contact us online to arrange an appointment and find out more about how we can help you achieve your financial goals in Santa Clarita, CA.
