Financial Advisor in Oklahoma City

As for financial professionals, the question of trust can be incredibly complicated. Financial professionals are in the unique position to hold the intimate details of their client’s wealth, and presumably, that comes with trusted advice that is in the best interest of their client. But is that always the case? Sadly, the answer is that some financial professionals have their client’s best interest in mind but others do not.

When considering who should best run their investment portfolio or help with retirement planning, the average person might search for a “financial advisor.” Or possibly a “wealth manager,” “financial consultant,” “financial planner,” “investment advisor,” “investment manager,” “fiduciary,” or “financial coach.” Do those terms even mean anything? How is the average person supposed to figure out how they are different? Or which letters after someone’s name are the best: CFA, CFP®, ChFC, CIMA, CMT, CIC, CFS, and so on. Consider the list of titles again:

• Financial Advisor

• Wealth Manager

• Financial Consultant

• Financial Planner

• Investment Advisor

• Investment Manager

• Fiduciary

• Financial Coach

Only two of these titles mean anything. Can you guess which two? Fiduciary and Investment Advisor, specifically a Registered Investment Advisor (RIA). The rest can be used by anybody and have no intrinsic meaning. This is most egregiously abused by the insurance industry. Insurance agents selling predatory, high-fee annuities and life insurance policies call themselves “financial advisors” when really, they are insurance salespeople.

What is a fiduciary?

In contrast, a “fiduciary” or a Registered Investment Advisor (RIA) is often not affiliated with a broker and receives nothing by putting you into specific funds. In other words, they are on the “same side” as you. The concept of a “fiduciary” can be applied to a lot of situations, as it generally means a person who acts on behalf of another person to manage assets. Essentially, a fiduciary is a person or organization that owes to another the duties of good faith and trust. Generally, that means charging a small flat percentage fee annually. As the value of your assets goes up, their fee goes up. In contrast, broker-dealers, who are often compensated by commission, only must fulfill what is called a “suitability obligation,” which means making recommendations that are somewhat consistent with the best interests of their client. Instead of having to place the clients’ interests above their own, the suitability standard only details that the broker-dealer must reasonably believe the recommendations are somewhat suitable for the clients’ financial needs, outlook, and risk assessment. As you can imagine, this means that when you see a “financial advisor” at a bank or broker-dealer chain, they have an incentive to place your money in funds that benefit them the most, not you.

CERTIFIED FINANCIAL PLANNERᵀᴹ in Oklahoma City

At Arrow, our planners must be have completed the process to become a CFP® professional. The CFP® requires strict education, experience, and fiduciary standards not present in many other designations. In addition, the CFP® board requires all certificate holders to pass and maintain strict ethical standards. In a world where many salespeople like to call themselves “financial advisors”, the CFP® designation provides consumers with an easy way to recognize a real fiduciary, and be confident their advisor has passed a rigorous education, experience, and testing process. The education curriculum itself includes 72 principle knowledge areas in investment, financial, retirement, insurance, tax, education, and estate planning.

If you want to learn more about what to expect when working with a CFP® professional, there is a great brochure from the CFP® Board that explains the requirements.

What questions should I ask a prospective financial advisor in Oklahoma City?

Here is a handy guide to figuring out if your prospective financial advisor is a fee only fiduciary or somebody just trying to sell you a product:

1. Are you affiliated with a bank or insurance company?
(If yes, run away; if no, go to question #2).

2. Do you receive any commissions for the sale of investment
products? (If yes, run away; if no, go to question #3).

3. Is the combined advising fee + fund fee more than 1%?
(If yes, run away; if no, go to question #4).

4. Are you a registered fiduciary that is independent and not
affiliated with a specific broker? (If yes, go to question #5).

5. Can you produce references of clients in similar financial
positions as me? (If yes and they are good references, go to question
#6).

6. Do you feel like you can trust this person to make good decisions
on your behalf with only your best interest in mind?
(If yes, move to #7).

7. You should consider hiring this person and their company.