Frequently Asked Questions
What is a Fiduciary?
A fiduciary obligation exists whenever the relationship with the client involves a special trust, confidence, and reliance on the fiduciary to exercise his discretion or expertise in acting for the client. The fiduciary must knowingly accept that trust and confidence to exercise his expertise and discretion to act on the client's behalf.
Is My Financial Advisor a Fiduciary?
Maybe. If your financial advisor is a registered investment advisor subject to the Investment Advisors Act of 1940 they are legally bound to act as a fiduciary on your behalf. If your financial advisor works for a broker/dealer, they are not bound to a fiduciary relationship but to a suitability standard set and enforced by FINRA. If your financial advisor is an insurance agent the answer is also no.
Who is the best financial advisor?
That depends on a lot of variables. If you seek fiduciary care, then a registered investment advisor firm would be your best choice. If you need financial planning help, you should seek a firm with a Certified Financial PlannerⓇ. If you are seeking advise on life insurance, the agent should have the CLU designation. If you are only looking for investment recommendations a broker could be a good choice. Whoever you select, you should know how they are compensated. Are they paid commissions for selling you a financial product or do you pay them directly for the advise they provide? To learn about any complaints or disciplinary actions pertaining to a potential advisor or firm you can search Broker Check. Unfortunately insurance agents are not included in this database.
What is a Certified Financial Planner?
The Certified Financial PlannerⓇ designation is conferred by the CFP Board foster professional standards in personal financial planning through its setting and enforcement of the education, examination, experience, ethics and other requirements for CFP®certification. For more information visit the CFP Board website.
What is a Fee-Only Financial Advisor?
A fee only financial advisor is paid directly by the client for financial advise. Fee-only means the advisor receives no commissions or other payments from third parties that could cloud their judgement or create a conflict of interest between the advisor and the client
What is a Fee-Based Financial Advisor?
A fee based financial advisor is paid by a third party for a client's participation in an investment platform. Sometimes the fee is paid by a registered investment advisory firm for assets they manage for the advisors clients, sometimes the fees are paid from fees a mutual fund company charges the shareholder for investing in a mutual fund. There are many variations of fee-based transactions. Be sure you are clear about all the fees charged and who shares those payments with whom.
How Much Does a Financial Advisor Cost?
A fee-only financial advisor's fee varies from firm to firm and also varies with the complexity of the client's situation and the amount of assets that the client needs help with. You could pay an hourly fee for financial planning (Oak Street Advisors charges $150 per hour for financial planning work) or a flat fee for the financial planning project. Sometimes the financial planning work is included in an asset management fee for clients who need both financial planning and investment advisory services. Oak Street Advisors aum fees are disclosed on page 12 of our form ADV Part 2 which can be viewed at the bottom of our home page.
What is a Comprehensive Financial Plan?
A comprehensive financial plan attempts to look at all aspects of your financial life and seek ways to reach your financial goals, minimize both your current and future income tax liability, manage and/or reduce your debts, provide for protection of income for you and your family, plan for expected expenses such as education and retirement and unexpected expenses such as disability or special needs, address estate planning needs, and more. A comprehensive financial plan will help you understand the steps you need to take today to achieve financial freedom. It is a customized document that is as unique as your life. For more information visit the financial planning page of our web site.
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