Having a trusted financial advisor in your corner will help you in any stage of life, whether you're starting a family, approaching retirement, founding a company, or growing a business.

But not all financial advisors are created equal.

If you're looking for a financial advisor that will dedicate their time to making sure you get the maximum return on your investment—regardless of any commission or bonus they might receive—you want to hire a fiduciary.  
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What Is a Fiduciary?

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A fiduciary is a person or institution that's legally required to put your best interests above their own. Fiduciaries earn a living by serving their clients, not by selling to them. The relationship between a fiduciary and a client is called a fiduciary relationship. Examples of fiduciary relationships are:

• Attorneys or accountants and their clients
• Corporate officers and Company shareholders
• Trustees and beneficiaries
• Employers and employees
• Fiduciary financial advisors and clients.
  

Whatever the fiduciary relationship may be, the fiduciary is always bound by something called fiduciary duty.
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Fiduciary Duty

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Fiduciary duty is an obligation to act in the best interest of a client at all times, even if doing so means acting against the fiduciary's best interests. That means a fiduciary advisor won't sell you an investment or retirement plan just to get a good commission. In fact, they may decide the best financial option for you is the one that gives them no monetary benefit at all.

If a fiduciary does act in a way that puts their interests above your own, it is considered a breach of fiduciary duty. If a breach of fiduciary duty results in financial damages, you have grounds to file a breach of fiduciary duty complaint.
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Fiduciaries vs. Financial Advisors

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Not all financial advisors are fiduciaries. There's no law saying a financial advisor must be a fiduciary, so it's always a prudent move to do some research before choosing a financial advisor. A general rule of thumb is to look at how an advisor is paid. Fee-only advisors are usually held by fiduciary duty. Fee-based or commission-based advisors tend not to be.

That doesn't mean all non-fiduciary advisors are looking to get one over on you. But working with them means you lose the protection of fiduciary duty. And if your advisor does act in a way that goes against your interests, they'll have little to no liability.  

What to Consider When Hiring a Fiduciary Advisor

Are they a fiduciary? While it might seem obvious, most financial advisors won't go out of their way to tell you they aren't a fiduciary. Getting an answer to this question right off the bat is the best way to start a conversation. If they can't tell you they are a fiduciary, this should be a red flag.

Look at their website and LinkedIn Profile. Get a feel for how they look online. This is where gut instinct comes into play. Polished social profiles and an up-to-date website indicate an attention-to-detail you'll want if, and when you give them influence over your finances.  

Do they have a history of complaints? Just as you would with an employee, a new doctor, or even a new restaurant, do some background research on the advisor you're considering. Look them up on the SEC's Investment Advisor Public Disclosure database. You will be able to see how many years of experience they have and any complaints, regulatory actions, or civil/criminal actions in their history.

Ask for references. An experienced fiduciary will likely have plenty of past clients they can refer to you. However, because of confidentiality, an advisor may or may not provide you with contact information of clients. If he or she does, then track down a few of these references and ask questions about their experience with the advisor. Keep alert for any red flags.

What Fiduciary Advisors Can (and Should) Do For You

Fiduciary advisors do more than just manage your investment portfolio. They are your full-stack financial consultants, offering expertise and impartial advice on personal, corporate, and estate finances. They will help you plan for retirement, make shrewd tax decisions, and navigate the business landscape. And while they work for you, you'll have peace of mind knowing every move they make is in your best interest. Here are the different types of services you should expect from a fiduciary:
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Financial Restructuring Plans

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Every business goes through ups and downs, but in especially dire times, you might need to get creative to weather the financial storm. Financial restructuring can get your company through catastrophic downturns by carefully executing internal changes. The restructuring process can be emotionally taxing. That's where a dedicated fiduciary comes in. They can help you make unbiased decisions that will put your company in a safer, more profitable position.  

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Business Estate Planning

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At some point, you have to plan on what will happen when you're no longer here. As a business owner, an estate plan helps you decide what happens to your business. It can be a delicate balancing act—on the one hand, you want to make sure you're taking care of your family and loved ones; on the other, you've spent years building your business and want to see it pass into capable hands. Having a fiduciary to guide you in business estate planning will help ensure you leave the legacy you desire.
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Business Tax Planning

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Tax season brings about a host of challenges. As your business matures, your tax workload increases exponentially. And with a tax code weighing in at over 2,000 pages, reducing your tax burden while avoiding missteps is a full-time job. To maximize your bottom line, you need a proactive approach. A seasoned fiduciary advisor can work collaboratively with your CPA and guide you through the best tax strategy, whether you're filing as a sole proprietorship, partnership, corporation, S Corp or LLC.
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Retirement Planning
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Retirement funds are often the bread-and-butter for big financial investment corporations. But those giant companies don't operate under fiduciary duty. In fact, they often sell or "place" you in their own proprietary funds, setting what they pay themselves with little to no transparency. Fiduciary advisors offer intelligent retirement planning no matter what stage of your investment life you're in. And they typically charge a percentage fee based on the assets you have invested, which means achieving your goals and growing your nest egg is their top priority-no fees are hidden.
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Business Valuation
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Having a solid grasp of your business's actual value is not a luxury; it is a necessity. Understanding your company's market value will help you with sales or succession considerations, lending options, mergers, acquisitions, and even retirement planning. A fiduciary will work side-by-side to help analyze your business. He or she will look at your assets, liabilities, cash flow, and past earnings to provide a clear picture of where your company stands.
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Equity Compensation Planning
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If you're a startup looking to hire the best employees but don't have the cash flow to compete with larger companies, you might have considered offering some form of equity compensation. Whether it's common stock, preferred stock, or stock options, initiating an equity compensation program takes careful planning and consideration. A fiduciary advisor will help you make the right plan for your business so you can maximize your cash flow and employee retention.

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Risk Management Strategy

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No investment strategy is completely risk-free, but mitigating risks should be one of your top priorities as an investor. Risk management involves balancing and diversifying your portfolio to accurately reflect your risk tolerance. If you're early in your investment life, you're more likely to invest heavily in stocks. As you get closer to retirement, less volatile investments like U.S. Government bonds likely make up more and more of your portfolio. Your fiduciary advisor should be aware of your risk tolerance, ability to bear risk and manage your portfolio accordingly.

Succession Planning
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When it comes to your company's longevity, knowing who will step in and fill critical roles when executives retire or pass away is vital. Succession planning involves creating strategies for succession, whether they're planned or unexpected. Having professional guidance in succession planning can allow you to identify the best candidates for every position in your company. And of course, planning who will fill your shoes is another key responsibility in succession planning.
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Compensation Strategies
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Retaining a loyal and effective workforce means offering competitive benefits. Retirement savings plans, insurance plans, and executive-level compensation benefits are all part of a well-rounded compensation and growth strategy. Depending on the size of your business, you might not be able to offer everything to everyone who works for you. A fiduciary will work with you to weigh the costs and benefits of every compensation option, helping you navigate the challenges and put together a plan that works for you, your business, and your employees.
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Why You Need a Fiduciary Advisor

Your finances are one area of your life where you should never feel vulnerable or uncertain. Having an advisor who is not a fiduciary means you'll never be entirely sure that your financial future is their number one priority. With a fiduciary, you can be confident knowing that the person providing you with advice and managing your assets is legally taking responsibility to always keep your best interests in mind.

If any potential conflicts of interest arise, a fiduciary is honor-bound and duty-bound by a governing regulatory body to let you know. Most importantly, fiduciaries are always working to help clients achieve their best financial results. "Best" is not necessarily maximizing returns, 'best' encompasses your objectives, goals, and expenses while being realistic about your tolerance and ability to bear risk. Whether it's managing your portfolio, developing a plan of action for retirement, or helping you devise and execute successful strategies for your business, a fiduciary always looks to do what is best for you.