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Three Bearings Fiduciary Advisors

You may not be familiar with the word fiduciary, but you certainly understand the concept behind it. The definition of fiduciary is an individual or institution that has a duty to act in the best interest of the client in all matters, at all times. A stock broker or other commissioned salesperson cannot be a fiduciary because of the inherent conflict of interest associated with the sale of financial products.

The National Association of Personal Financial Advisors (NAPFA) defines fiduciary as:

Fiduciary - A financial advisor held to a Fiduciary Standard occupies a position of special trust and confidence when working with a client. As a Fiduciary, the financial advisor is required to act with undivided loyalty to the client. This includes disclosure of how the financial advisor is to be compensated and any corresponding conflicts of interest.

A Fiduciary Standard ensures:

Trust - A client who trusts his financial advisor can be fully confident that he is receiving the best possible advice from the best possible advisor.  Without trust, confidence cannot be achieved.

Loyalty - An advisor who is loyal to his clients will not be swayed by outside forces to recommend investments with commissions or payouts.  With loyalty, clients can be sure their interests are placed first.

Disclosure - A client must know and understand how the financial advisor is being compensated for advice. Further, the client must know whether or not any conflicts exist that may cause a problem with that advisor’s ability to provide truly independent advice.  Only with full disclosure can prudent advice be provided.

How do you know if your current or prospective advisor adheres to a Fiduciary Standard? Ask the following questions:

  • Are you held to a fiduciary standard in all dealings with my financial matters? 
  • Have you disclosed all current and potential conflicts of interest that exist between us?
  • Do you receive any commission-based compensation or other incentives?
  • Do you receive referral fees from other service providers?
  • Have you signed a Fiduciary Oath?

Bearing Point Wealth Partners' employees adhere to NAPFA's Fiduciary Oath.

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