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F Is For Fiduciary

pbskids.org

That’s good enough for me. There’s a great article in the New York Times about choosing a financial planner, and the importance of choosing one that is a fiduciary. Fiduci-huh?

It means they are legally obligated to put YOUR financial interests first, meaning, ahead of theirs. You are putting your financial well-being in this person’s hands, and practically anyone can sell themselves as a financial advisor, so it’s important to ask them if they’re a fiduciary, get references, and do your due diligence. Basically, make sure they’re not a con-artist or a yahoo. Also, they should charge by hourly fee and not by commission - a commission means they have a financial incentive to persuade you to invest in certain investments over others. Here’s a quote from the article:

What I learned, though, is that while most people hire a financial planner more casually than they might, say, choose a hair stylist, you really should go into it as if you are selecting a marriage counselor.

Not that your hair isn’t important, but something to consider. The article has all kinds of great advice and resources for finding a good financial planner, and it also explains the difference between a financial planner, investment advisor, and stock broker.